San Diego PPP Loan Fraud Lawyers

You think your PPP fraud is one crime. You filed an application. You received money you shouldn't have. If prosecutors come after you, they come after you for that - the PPP fraud. One investigation. One charge. One sentence.

That's not how San Diego works.

Welcome to Spodek Law Group. Our goal is to tell you what other websites won't: in the Southern District of California, PPP fraud is never just PPP fraud. Its the loose thread prosecutors pull to unravel everything else. Denny Bhakta obtained $4.4 million in fraudulent PPP loans. He was convicted on 25 counts - not just for PPP, but for the $35 million Ponzi scheme the PPP money was funding. Leronce Suel committed $1.7 million in PPP fraud. He was convicted on 11 counts including tax evasion, false returns, and conspiracy. The PPP application wasnt their crime. It was the evidence that exposed their crimes.

When San Diego prosecutors investigate PPP fraud, they're not looking for one thing. They're looking for everything else you thought was hidden.

PPP Fraud Is the Loose Thread

Most people think of PPP fraud as a standalone offense. You applied. You lied. You received money. That's the crime. That's what your facing.

Thats not how federal prosecutors in San Diego see it.

In the Southern District of California, PPP fraud is treated as a symtom of broader financial criminality. If you committed PPP fraud, prosecutors assume you probly committed other crimes too. The PPP investigation basicly becomes a diagnostic tool - a way to access bank records, tax returns, and financial transactions that reveal everything else you were doing.

Heres how this works in practice. Prosecutors subpoena your bank records for the PPP fraud investigation. They trace where the PPP money went. But they dont stop there. They also see where your OTHER money came from. They notice income that dosent match your tax returns. They see transferes to accounts you never disclosed. They find spending paterns that suggest additional fraud. The PPP investigation expands to encompass everything.

Denny Bhakta thought he was committing PPP fraud. He wasnt. He was giving prosecutors access to his entire financial life. The PPP applications - 18 of them totaling $4.4 million - led investigators to a $35 million securities fraud scheme. They found the Ponzi payments. They found the gambling losses. They found the luxury cars bought with investor money. The PPP fraud wasnt the destination. It was the door.

The PPP application is the loose thread. When they pull it, everything else unravels. In San Diego, prosecutors have developed expertise at turning single-crime investigations into multi-count indictments that capture every financial transgression you ever committed.

The Bhakta Trap: From PPP to Ponzi

Let me show you exactly how one crime becomes 25 counts.

Denny Thakorbhai Bhakta of San Diego submitted 18 separate PPP loan applications. He obtained $4.4 million in fraudulent funds. To get those loans, he created fake W-2s and other IRS documents. He used the names and personally identifying information of his own investor-victims to claim them as employees. The people he had already defrauded through his investment scheme - he used their identities to commit PPP fraud too.

OK so what did Bhakta do with the PPP money? He used it to keep his Ponzi scheme alive.

For years, Bhakta had been running an investment fraud. He promised investors he would use their money to buy blocks of hotel rooms. Instead, he took their money straight to casinos. Evidence at trial showed Bhakta was flown to Las Vegas on the Wynn private jet basicaly as a VIP. In just one 7.5-hour gambling binge in 2018, he lost $1 million at the casino. Through casino records, prosecutors demonstarted how Bhakta repeatadly took investors' money and gambled it away.

By 2020, the Ponzi scheme was basicly running out of new investors. Bhakta needed fresh money to make payments to existing victims. PPP actualy provided that money. The $4.4 million in fraudulent PPP loans wasnt stolen for its own sake - it was stolen to fuel a much larger fraud.

Heres the part that should terrify you. Bhakta victimized his own friends and family. His uncle testified that he came to the U.S. as an immigrant with a suitcase and $8 in his pocket. Because of Bhakta, he "lost everything he had worked for in 57 years in America." Bhakta swindled him out of $4.5 million. And then Bhakta used his uncle's identifying information on PPP applications, victimizing him again.

The result? Bhakta was basicaly convicted on ALL 25 counts. Securities fraud. Bank fraud. Money laundering. PPP fraud. The jury deliberated and found him guilty on everything. Judge Janis L. Sammartino called his conduct "could not have been more deliberate, could not have been more calculated." She noted his only motive was "greed and gambling" and he showed "nothing resembling remorse."

The trial evidence was overwhelming. Prosecutors introduced casino records showing exactly how much Bhakta gambled and lost. They presented the fake W-2s he created to defraud the PPP program. They showed bank records tracing investor funds directly to casino accounts. They called victims to the stand - including family members who trusted Bhakta with their life savings. When you victimize your own family and then use their identitys to commit additional federal crimes, judges respond acordingly.

The sentence? 235 months. Thats nearly 20 years in federal prison. Bhakta was remanded into custody immediately after the verdict. His Mercedes-Benz S-Class and Porsche 911 Turbo S? Forfeited. His freedom? Gone until hes in his 70s.

Heres something practitioners understand that the public dosent. The PPP fraud wasnt Bhakta's main crime. It was the crime that exposed his main crime. Without the PPP investigation, prosecutors might never have unraveled the full scope of his Ponzi scheme. The 18 fraudulent applications created 18 threads for investigators to pull. Each thread led to something else.

When Restaurants Become Crime Scenes

Maybe you think the Bhakta case is extreme. Ponzi schemes are unusual. Most people dont have $35 million in securities fraud hiding behind their PPP applications.

Consider Leronce Suel.

Suel was a San Diego restaurateur. He owned popular local eateries including Streetcar Merchants in North Park. He ran Rockstar Dough LLC and Chicken Feed LLC. Legitimate businesses serving real customers. The kind of person who might reasonably have applied for PPP funds during the pandemic.

Instead, Suel and a business partner submitted fraudulent applications for PPP loans and Restaurant Revitalization Fund grants. They falsely claimed their businesses were eligible for assistance. They obtained more then $1.7 million in fraudulent COVID relief funds.

What did they do with the money? They definately didnt use it for rent or payroll. They made substancial cash withdrawals from their business accounts. They purchased a home in Arkansas. And Suel - this is where it gets remarkable - concealed more then $2.4 million in cash in his bedroom.

On June 23, 2022, IRS Criminal Investigation agents executed a search warrant at Suel's residence. They seized $2.4 million in cash. Hidden in his bedroom. Think about that. The amount of money most people work their entire lives to earn, stuffed in a bedroom. The PPP fraud investigation led agents directly to evidence they would never have otherwize found.

But it didnt stop there. Federal investigators also discovered that Suel had been committing tax fraud for years. He underreported more then $1.7 million in gross income on his 2020 tax return, basicly hiding it completly. He submitted amended returns with false information, bogus business losses, phantom deductions. In one case, he claimed rental expences for a property he wasnt actualy paying rent on.

The PPP investigation became a tax evasion investigation became a conspiracy investigation. Suel was convicted on 11 counts: wire fraud, conspiracy to defraud the federal government, tax evasion, filing false returns, and failing to file returns. He was acquitted on money laundering - the only counts he beat.

Text messages between Suel and his co-conspirator, uncovered by prosecutors, detailed their efforts to manipulate financial records to secure the relief funds. The digital evidence trail was extremly comprehensive. Every fraudulent representation, every coordinated action, every attempt to conceal the scheme was documented in their own words. When you conspire via text message, prosecutors have a transcript of the conspiracy.

The sentence? 42 months in federal prison. Restitution of $1,773,245 to the SBA. Forfeiture of $1,466,918 in seized assets. His co-conspirator, who was also indicted, died of unknown causes in December 2023 before trial. Suel faced the jury alone and lost on almost everything.

San Diego prosecutors aren't just looking for PPP fraud. They're looking for what PPP fraud is hiding. Suel's PPP application led to the discovery of years of tax evasion and $2.4 million in unreported cash. The PPP fraud was the symptom. The broader financial criminality was the disease.

What San Diego Sentences Actually Look Like

Let me show you whats actualy happening in the Southern District of California right now. Not guidelines. Not hypotheticals. Real sentences from real cases.

Denny Bhakta - San Diego. 18 PPP loans totaling $4.4 million. Used to fuel $35 million Ponzi scheme. Created fake W-2s, used victims' identities. Lost millions gambling. Sentence: 235 months (nearly 20 years). Convicted on ALL 25 counts. Mercedes and Porsche forfeited.

Leronce Suel - San Diego restaurateur. $1.7+ million in fraudulent PPP and RRF applications. $2.4 million cash hidden in bedroom. Tax evasion on top of fraud. Sentence: 42 months. Convicted on 11 counts. Restitution: $1,773,245. Forfeiture: $1,466,918.

Salman - Lemon Grove. $401,000 in PPP and EIDL fraud. International wire transfers to Morocco. Facing up to 20 years. Money laundering charges compounding exposure. Used three different businesses - Lemon Grove Deli and Grill, Al Laith Trading, and Alliance Security Consulting - with false employee counts and payroll figures.

Heres the pattern you should notice. These arent just PPP fraud cases. Bhakta's 25 counts included securities fraud, bank fraud, and money laundering. Suel's 11 counts included tax evasion and conspiracy. Salman faces money laundering for international transfers. In every case, the PPP fraud connected to and revealed additional crimes.

The sentencing in San Diego reflects the multi-crime nature of these prosecutions. Bhakta didnt get 235 months for $4.4 million in PPP fraud alone. He got 235 months for the entire $35 million scheme the PPP fraud was part of. Suel didnt get 42 months for PPP fraud alone. He got 42 months for PPP fraud plus years of tax evasion plus conspiracy.

And the restitution is permanant. Suel owes $1.77 million to the SBA that he cant discharge in bankruptcy. He'll be paying it back for the rest of his life. Wages garnished. Tax refunds intercepted. Assets subject to seizure. The sentence dosent end when prison ends.

The forfeiture numbers compound the punishment. Bhakta lost his luxury vehicles. Suel forfeited over $1.4 million. Everything these defendants bought with fraud proceeds - or kept hidden in their bedrooms - became property the government seized. The lifestyle PPP fraud funded becomes the evidence that justifies the forfeiture that takes it all away.

The Multi-Count Indictment Pattern

Heres were San Diego differs from other districts.

Some federal districts charge PPP fraud narrowly. Wire fraud. Bank fraud. Maybe money laundering if the spending was egregious. Three to five counts. Manageable exposure.

San Diego builds comprehensive indictments that capture everything the investigation uncovers. If the PPP investigation reveals tax fraud, thats charged. If it reveals securities fraud, thats charged. If it reveals conspiracy with others, everyones charged together. The result is multi-count indictments that create overwhelming trial exposure.

Think about what this means practicaly. Bhakta faced 25 counts. Even if he had beaten some charges at trial, the remaining convictions would have been devastating. Suel faced multiple counts and was acquitted on money laundering - but still convicted on 11 other counts. The volume of charges makes trial defense extraordinarily difficult. When prosecutors can prove 11 out of 15 counts, you still lose badly.

And each count adds to sentencing exposure. The federal sentencing guidelines calculate punishment based on total loss across all counts. Multiple fraud schemes compound. Tax evasion adds specific offense characteristics. Conspiracy adds organizational enhancements. The multi-count structure means sentences accumulate in ways single-charge prosecutions dont.

Heres something that makes San Diego especialy dangerous. The Southern District has experience prosecuting complex financial crime. They know how to trace money. They know how to build conspiracy cases. They know how to turn document trails into multi-count indictments. When they investigate PPP fraud, they apply the same investigative intensity they would to any major financial crime.

The Bhakta case demonstrates this perfectly. Prosecutors obtained casino records going back years. They traced investor funds through multiple accounts. They documented every Ponzi payment. They recovered text messages and emails showing Bhakta's awareness that his scheme was collapsing. The investigation was forensic and comprehensive - the kind of deep-dive analysis that most defendants never anticipate when they submit a single fraudulent application. Every financial relationship Bhakta had became a thread for investigators to pull. His accountant. His bank. His investment advisors. Each one provided documents that connected to additional crimes.

The result is that "small" PPP fraud becomes gateway to everything else you were hiding. And everything else carries its own sentences, its own restitution, its own forfeiture.

Why Your Other Crimes Are Now Exposed

You might think you only committed PPP fraud. You might be wrong.

Think about your financial situation during COVID. Did you accurately report all income on your tax returns? Did you have other businesses or ventures that werent profitable? Did you move money between accounts in ways that might look suspicious? Did you have cash income you didnt fully disclose?

The PPP investigation gives prosecutors access to all of it. Bank records. Tax returns. Financial statements. Business documents. The scope of a PPP fraud investigation is broad enough to capture anything connected to your finances. And prosecutors in San Diego have shown they will pursue every violation they find.

Heres the part that should concern you most. You dont get to choose which investigation you face. You applied for PPP. If that application was fraudulent, you've created the predicate for an investigation. Once that investigation begins, its scope is determined by prosecutors - not by you. And prosecutors in the Southern District have demonstrated they will expand investigations to capture every crime the evidence supports.

Leronce Suel probably thought his tax fraud was separate from his restaurant business. It wasnt. The PPP investigation led directly to the tax investigation. Denny Bhakta probably thought his Ponzi scheme was separate from his PPP applications. It wasnt. The PPP investigation exposed the entire scheme.

The 10-year statute of limitations created by the PPP and Bank Fraud Enforcement Harmonization Act of 2022 means prosecutors have time to be thorough. Traditional fraud has a 5-year clock. PPP fraud has 10 years. If you applied in 2020, your exposed until 2030. If you obtained forgiveness in 2022, exposure extends to 2032. Prosecutors arent rushing. They're building comprehensive cases that capture everything.

This extended timeline means investigations can develop slowly and expand methodicaly. Bhakta's fraud scheme dated back years before PPP even existed. The PPP investigation became the vehicle for prosecuting crimes that predated the pandemic. Suel's tax evasion went back multiple years. The PPP application was just the entry point for a much broader accounting of financial misconduct.

Someone in your network may already be cooperating. Your accountant. Your business partner. Your tax preparer. Any of them could be providing information that expands your investigation beyond PPP into everything else. Every day you wait, the investigation potentially grows.

At Spodek Law Group, Todd Spodek has handled hundreds of federal fraud cases. The clients who call before the subpoena have options. Voluntary disclosure. Cooperation agreements. Strategic positioning on what crimes are investigated. The clients who call after the investigation expands are fighting on multiple fronts - PPP fraud plus tax fraud plus whatever else the investigation uncovered.

Call 212-300-5196 before your PPP investigation expands into everything else. Not becuase we're trying to scare you into hiring a lawyer. Becuase in San Diego, with multi-count indictments and investigation expansion and prosecutors who specialize in unraveling complex financial crime, the PPP application you submitted might be the least of your problems.

Spodek Law Group. The Woolworth Building, 233 Broadway Suite 710, New York. We put this information on our website becuase most people have no idea that PPP fraud investigations dont stay contained. Our goal isnt to frighten you. Its to make sure you understand that San Diego prosecutors use PPP fraud as a starting point - not an ending point. And what they find when they start looking could be worse then the PPP fraud itself.

In San Diego, PPP fraud is the loose thread. What unravels could be everything.