Orange County PPP Loan Fraud Lawyers
You got a PPP loan in 2020. Maybe 2021. Everyone did - the government was practically throwing money at businesses during the pandemic. You filled out the application, got approved, used the funds, maybe even got forgiveness. Years passed. You moved on. You assumed it was over.
The federal government hasn't forgotten.
The Central District of California was hand-picked by the Attorney General to head one of only three national COVID-19 Fraud Strike Force Teams. Orange County sits at strike force headquarters. The 10-year statute of limitations means that 2020 loan you thought was forgotten is prosecutable until 2030. Defendants sentenced in 2025 are receiving sentences 40% longer than those sentenced two years ago for identical conduct.
Welcome to Spodek Law Group. We handle federal PPP loan fraud defense in Orange County and throughout the Central District of California. If you're under investigation, if you've received a letter from the SBA Office of Inspector General, or if federal agents have contacted you - this article explains exactly what you're facing and what options still exist.
The Strike Force Is Based Here
On September 15, 2022, Attorney General Merrick Garland selected the U.S. Attorney's Offices for the Central and Eastern Districts of California to jointly head one of three national COVID-19 Fraud Strike Force Teams. That wasn't random. The strike force was established to combine law enforcement and prosecutorial resources to focus on large-scale pandemic relief fraud. And Orange County is in there crosshairs.
The Central District of California is the largest federal district in America. It covers seven counties: Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara, and San Luis Obispo. Orange County cases are prosecuted through the Santa Ana office. Since 2025, these strike force teams have charged dozens of cases across California - including 14 defendants arrested in May 2025 for allegedly obtaining over $25 million in fraudulent loans.
But the really important part isn't the strike force. Its the statute of limitations.
In August 2022, President Biden signed the PPP and Bank Fraud Enforcement Harmonization Act. Most people missed what it actualy did. It extended the statute of limitations from 5 years to 10 years - retroactively. A PPP loan from 2020 is prosecutable until 2030. A loan from 2021 until 2031. The government gave itself a full decade to come for you. Courts have consistently rejected challenges to the retroactive application - your out of luck on that argument.
So how active is this strike force? The numbers are worse then you'd expect.
The Numbers From Inside the Machine
According to Pandemic Oversight, as of December 31, 2024:
- 3,096 defendants have been charged with pandemic relief fraud
- 2,532 defendants have been found guilty (82%)
- 1,741 received prison time (81% of those convicted)
- 2,008 were ordered to pay restitution (94%)
- Prison sentences ranged from 1 day to 30 years, with the majority between 1-5 years
More then 440 defendants were ordered to pay $1 million or more in restitution. Restitution amounts have reached as high as $71 million.
The median time from initial referral to indictment has decreased by 45% compared to 2022-2023. What used to take 8-12 months now takes 4-6 months. The goverment has gotten faster. More efficient. More ruthless.
Early in the pandemic, some federal judges showed leniency. The economic chaos. The desperation. The confusing SBA guidance that changed weekly. Some judges gave probation or minimal prison time for smaller PPP frauds.
Those days are completley over.
Defendants sentenced in 2024-2025 are receiving sentences aproximately 40% longer than defendants who committed identical conduct but were sentenced in 2021-2022. In 2021, a first-time offender with $50,000 fraud might have gotten probation with home confinement. In 2025, that same defendant gets 12-18 months in federal prison. Federal judges in the Central District have seen hundreds of these cases. There not impressed by your story anymore.
Recent sentencing examples from CDCA:
- Mustafa Qadiri (Irvine): 54 months for $5 million - Ferrari, Bentley, and Lamborghini seized
- Robert Benlevi (Encino): 135 months for $27 million - oceanfront Santa Monica apartment
- Raymond Magana (Santa Clarita): 41 months - judge called it a "despicable offense"
- Jasmine Mallard-McCarter: 84 months (June 2025)
The machine is running. And there's a window most people don't know about.
The Window Most People Miss
Here's something most Orange County business owners don't understand about PPP investigations.
There's a window - typically six to twelve months - between when the SBA OIG flags your loan and when the case gets referred to the FBI for criminal investigation. During this window, leverage exists that completley disappears once criminal charges are filed.
The SBA Office of Inspector General has recieved more than 238,000 hotline calls since the pandemic began. From those, they identified approximately 40,000 actionable complaints. If a disgruntled employee, ex-business partner, or competitor called about your loan - that complaint went directly to investigators. The SBA referred over 669,000 PPP loans to investigators. That's 1 in 20 loans.
During the OIG review stage, a skilled defense attorney may be able to negotiate a civil disposition. Repayment plus a fine. Maybe a False Claims Act settlement. Not pleasent, but not a federal felony conviction either. Not prison.
But here's the trap most people fall into.
Some people, panicking, decide to voluntarily repay the loan thinking it will make the problem go away. The DOJ has explicitly stated that voluntary repayment can be used as evidence of consciousness of guilt. Returning the money doesn't make it go away - it can actualy strengthen the governments case against you. Your instinct to "make it right" can make it worse.
This is complicated. The timing matters enormously. Wheather to repay, when to repay, how to structure any resolution - these decisions require counsel who understands how federal prosecutors in CDCA actualy think.
What Orange County PPP Defendants Face
The PPP itself doesn't have criminal provisions. The CARES Act isn't a penal statute. So how are people going to federal prison?
The DOJ uses pre-existing fraud statutes to prosecute PPP fraud. One application can trigger multiple charges:
- Wire Fraud (18 U.S.C. 1343) - 20-30 years
- Bank Fraud (18 U.S.C. 1344) - 30 years
- False Statements to SBA (18 U.S.C. 1014) - 30 years
- Money Laundering (18 U.S.C. 1956) - 20 years
- Aggravated Identity Theft (18 U.S.C. 1028A) - mandatory +2 years consecutive
One PPP application can create theoretical exposure exceeding 100 years. In practice, sentences don't reach that level - but charge stacking gives prosecutors enormous leverage in plea negotiations.
Mustafa Qadiri of Irvine faced 15 federal counts for a single $5 million scheme. He allegedly submitted fraudulent applications to three banks, used someone else's Social Security number and signature, then spent the money on luxury vehicles. Federal agents seized a Ferrari, Bentley, and Lamborghini. They also took $2 million from his bank account. He got 54 months.
The single most important rule if you're under investigation:
Never agree to discuss a potential PPP fraud case with a federal agent without a lawyer present.
This sounds obvious. But there have been several recent cases where people who decided to talk to investigators without counsel ended up being charged with obstruction or making false statements to federal agents - in addition to the underlying PPP fraud. The agents seem friendly. Cooperative. Their not on your side.
If you're under investigation or concerned you might be:
- Don't destroy any documents. Document destruction can become a separate charge.
- Don't discuss the matter with others who may be involved. Those conversations can be used against you.
- Don't make voluntary payments to the SBA without counsel. This can be used as consciousness of guilt.
- Contact a federal defense attorney immediately. The earlier you act, the more options exist.
Todd Spodek has handled PPP fraud cases in the Central District of California. He understands the difference between OIG-stage investigations where civil resolution may be possible, and FBI-stage investigations where criminal defense is the priority.
When Your Ready
If you're in Orange County - or anywhere in the Central District of California - and you're facing a PPP loan fraud investigation, Spodek Law Group can help you understand where you stand and what options exist.
The consultation is free. Theirs no obligation.
What you'll get is an honest assessment. Is this still at the OIG stage where civil resolution might be possible? Has it been referred to the FBI? What does the evidence look like? What are realistic outcomes - not best-case fantasies, but actual possibilities based on how these cases play out in CDCA?
Call us at 212-300-5196. The statute of limitations runs until 2030 or 2031 depending on when you got the loan. The government has time. But once they move, things happen fast. The earlier you have counsel, the more leverage exists.
Were here when you need us.
