San Jose PPP Loan Fraud Lawyers

You think having multiple companies protects you. Separate LLCs. Different entities. If one company gets investigated, the others are safe. Your portfolio spreads the risk.

That's not how San Jose works.

Welcome to Spodek Law Group. Our goal is to tell you what other websites won't: in the Northern District of California, your company portfolio becomes your criminal portfolio. Kishore Kethineni ran four tech companies. His brothers ran three more. Seven companies. Twelve PPP applications. $3.1 million in fraud. Prosecutors didn't see seven separate companies with seven separate problems. They saw ONE conspiracy. ONE family. ONE scheme. And the PPP investigation exposed $2 million in unpaid employment taxes from years before the pandemic even started.

If you have multiple companies, if you worked with family members on PPP applications, if your entities are connected in ways prosecutors can trace - San Jose prosecutors will treat your portfolio as evidence of organized crime.

When Your Portfolio Becomes Your Prosecution

Most people in Silicon Valley think in portfolios. You don't run one company - you run several. You don't have one LLC - you have a family of entities. It's normal. It's how business works in the Bay Area.

That's not how federal prosecutors in San Jose see it.

In the Northern District of California, prosecutors treat connected entities as a single criminal enterprise. They aren't looking at each company seperately - they're looking at HOW your companies connect. The family relationships. The shared resources. The patterns of applications. The web of entities that makes fraud possible at scale.

Heres how this works in practice. You have three LLCs. You submitted PPP applications for all of them. You figured each application was independant - one company, one loan, one risk. Wrong. To San Jose prosecutors, three connected applications demonstrate a PATTERN. A scheme. An organized approach to defrauding the government. And organized fraud gets prosecuted as organized crime.

The Northern District of California has demonstrated that multi-entity fraud triggers conspiracy charges. Kishore Kethineni and his brothers ran seven companies. They submitted twelve applications. Prosecutors didn't bring seven cases. They brought ONE conspiracy case that captured everything. The family network became the criminal network.

The more companies you used for PPP applications, the more conspiracy charges you face. San Jose prosecutors don't just see individual frauds. They see patterns. Networks. Enterprises. And they charge acordingly.

The Kethineni Trap: 7 Companies, 1 Conspiracy

Let me show you exactly how a tech portfolio becomes 2 years in federal prison.

Kishore Kethineni of Dublin, California - just north of San Jose in the Bay Area - was the CEO of four software development and IT services companies. BiteGate, Inc. Dinenamics, Inc. Neelinfo, Inc. TechPMC, Inc. His two brothers owned three more companies. Boxstertech, Inc. Hiretechforce, Inc. TechGlobalSystems, Inc. Seven companies total. One family.

OK so what happened? Between April 2020 and May 2021, Kethineni and his brothers submitted at least twelve PPP loan applications across there seven companies. They made fraudulent representations. They provided falsified payroll data. They submitted fake records to obtain loans and loan forgiveness.

The result? Nine of those applications were approved. The family obtained over $3.1 million in PPP funds. Money that was supposed to go to payroll. Money that was supposed to keep employees paid during the pandemic. Instead, Kethineni redirected significant amounts to himself and his family members.

Heres the part that should terrify you. Prosecutors didn't just find the PPP fraud. They found everything else Kethineni had been hiding. While investigating the PPP applications, they discovered that Kethineni had been failing to pay employment taxes for years. From 2014 through 2018 - years before PPP even existed - Kethineni had withheld taxes from his Neelinfo employees but never paid them to the IRS. The employment tax liability totaled over $2 million.

Think about what this means. Kethineni thought he was commiting PPP fraud. He was actualy exposing years of tax evasion. The PPP investigation gave prosecutors access to his entire financial history. They saw the tax forms that were never filed. They saw the withholdings that were never paid. They saw five years of deliberate evasion that had nothing to do with the pandemic.

The sentence? Two years in federal prison. But the financial consequences were far worse. Kethineni was ordered to pay $3,295,514.25 in restitution. He forfeited $3,186,315.00. He paid a $15,000 fine. And he faces two years of supervised release after prison. The total financial exposure exceeded $6.5 million - more then double what he stole through PPP.

The investigation revealed the full scope of Kethineni's financial misconduct. FBI agents traced every PPP disbursement. IRS Criminal Investigation examined years of tax records. The Small Business Administration Office of Inspector General analyzed the applications. The Special Inspector General for Pandemic Recovery coordinated across agencies. When multiple federal agencies coordinate an investigation into your business empire, they find everything. They share information. They cross-reference documents. They identify patterns that no single agency would catch alone. Kethineni's seven companies became seven sources of evidence. His twelve applications became twelve threads for investigators to pull. His brothers became potential witnesses against him.

His brothers remain a mystery. The U.S. Attorney's Office didn't reveal wheather they were charged seperately. But the conspiracy charge captured the entire family scheme. Whether his brothers face there own prosecutions or were handled as cooperating witnesses, the family enterprise was destroyed.

Here's something practitioners understand that the public dosent. Kethineni pleaded guilty because fighting a multi-entity conspiracy case is nearly impossible. When prosecutors can show seven companies, twelve applications, and three family members all working together, the evidence is overwhelming. Every application corroborates every other application. Every family member implicates every other family member. The portfolio that made fraud seem easier is what made conviction unavoidable.

How Serial Applications Multiply Your Exposure

Maybe you think the Kethineni case is unusual. Seven companies. Three brothers. Most people don't have that kind of corporate structure.

Consider Lebnitz Tran.

Tran was a San Jose resident who submitted twenty-seven PPP loan applications. Twenty-seven. And seven EIDL applications. That's thirty-four seperate federal crimes in total.

Each application used false and fictitious information. Falsified employee information. Fictitious or grossely exaggerated payroll figures. Fake tax documents. Tran sought over $8 million in fraudulent loans. He actualy obtained aproximately $3.6 million. After fees and other deductions, he netted about $2 million.

Now think about the exposure. Tran was charged with six counts of wire fraud and three counts of bank fraud. Each wire fraud count carries up to 20 years. Each bank fraud count carries up to 30 years. The theoretical maximum? Over 200 years in federal prison.

Obviousely no one serves 200 years. But the volume of counts gives prosecutors enormous leverage. They can offer to drop some charges in exchange for a guilty plea. They can calculate sentencing enhancements based on the total loss across all applications. They can use the sheer number of fraudulent acts to argue for sentences at the high end of guidelines.

Every entity in your portfolio becomes a count in your indictment. One fraudulent application is bad. Ten fraudulent applications is catastrophic. Thirty-four fraudulent applications is a criminal career.

The serial applicant pattern is especialy dangerous in the Northern District. Prosecutors here are used to dealing with tech entrepreneurs who think at scale. They understand that the same mentality that makes someone submit one application might make them submit a dozen. And they charge acordingly.

The charging calculus for serial applicants is brutal. Each application is a seperate federal crime. Each false statement is a seperate act of fraud. Each wire transfer of funds is a seperate wire fraud count. When you submit 27 applications, prosecutors have 27 different bases for charges. Even if they only charge a fraction, the sheer volume creates insurmountable sentencing exposure. Tran's nine counts represent a fraction of the fraud he committed - and still carry potential sentences measured in decades.

What San Jose Sentences Actually Look Like

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

Kishore Kethineni - Dublin. CEO of 4 software companies. Brothers owned 3 more. 12 PPP applications across 7 companies. Obtained $3.1 million. Also: $2 million employment tax liability from 2014-2018. Sentence: 2 years federal prison. Restitution: $3,295,514.25. Forfeiture: $3,186,315.00.

Lebnitz Tran - San Jose. 27 PPP applications. 7 EIDL applications. Sought $8 million, obtained $3.6 million, netted $2 million. False employee info, fake payroll, falsified tax documents. Charged with 6 wire fraud counts, 3 bank fraud counts. Facing up to 30 years per bank fraud count.

Yaroslav Sergiyenko - San Jose. $1.7 million in PPP loans through false applications. Tech company owner. Inflated payroll expenses. Fake employee counts. Prosecution pending.

The pattern across these cases reveals something important about Northern District prosecution strategy. Prosecutors aren't just charging individual acts of fraud. They are building cases that capture the full scope of financial misconduct. Kethineni faced PPP charges PLUS employment tax charges. Tran faced wire fraud PLUS bank fraud. The multi-crime indictment has become standard practice in the Northern District. If you committed PPP fraud, prosecutors assume you committed other crimes too. And they charge accordingly.

Here's the pattern you should notice. The Northern District doesn't give light sentences to tech defendants just becuase they're tech defendants. Kethineni ran software companies, had employees, contributed to the economy. None of that mattered. He got prison time, million-dollar restitution, and asset forfeiture.

And the compound discovery problem made everything worse. Kethineni thought he was facing $3.1 million in PPP fraud exposure. He was actualy facing that plus $2 million in employment tax liability. The total restitution - over $3.2 million - reflects the combined fraud. The investigation of PPP exposed everything else.

The restitution is permanant. Kethineni owes over $3 million that he cant discharge in bankruptcy. Hell be paying it back for the rest of his life. Wages garnished. Tax refunds intercepted. Assets seized. The sentence doesn't end when prison ends.

The forfeiture compounds the punishment. Kethineni forfeited over $3.1 million. Everything he obtained through fraud became government property. The family enterprise he built became the evidence that destroyed his financial future.

The Compound Discovery Problem

Here's were tech founders make the mistake that costs them millions.

When prosecutors investigate your PPP applications, they get access to your financial records. Bank statements. Tax returns. Payroll documents. Corporate filings. They're looking for evidence of PPP fraud, but they see EVERYTHING.

The Kethineni case demonstrates this perfectly. Prosecutors investigating PPP applications from 2020-2021 discovered employment tax violations from 2014-2018. Five years of tax evasion that had nothing to do with PPP. Five years of withholding taxes from employees and pocketing the money instead of sending it to the IRS.

How did they find it? Simple. To investigate PPP fraud, you look at payroll records. Payroll records show what companies paid employees. Payroll records should match employment tax filings. Kethineni's records did not match becuase he never filed them. The PPP investigation exposed years of seperate criminal conduct.

The mechanism of discovery is straightforward but devastating. Prosecutors request bank records to verify PPP fund usage. Bank records show deposits and withdrawals going back years. Prosecutors request tax returns to verify payroll claims. Tax returns show income and deductions going back years. Prosecutors request corporate filings to verify business legitimacy. Corporate filings show ownership structures and related entities going back years. Every document you provide to defend against PPP charges becomes a document that can expose other crimes.

Think about your own situation. What will prosecutors find when they start looking at your financial records? Did you accurately report all income? Did you pay all employment taxes? Did you file all required returns? Are there discrepancies between what you told the SBA and what you told the IRS?

Every inconsistancy becomes a thread prosecutors can pull. Every discrepency raises questions. Every gap in your records suggests concealment. The PPP investigation isn't contained to PPP - its a gateway to everything else you were doing wrong.

The 10-year statute of limitations created by the PPP and Bank Fraud Enforcement Harmonization Act of 2022 means prosecutors have time to conduct comprehensive investigations. Traditional fraud has a 5-year clock. PPP fraud has 10 years. If you applied in 2020, you're exposed until 2030. Prosecutors aren't rushing. They are building cases that capture every financial transgression - PPP fraud, tax evasion, unreported income, everything.

This extended timeline gives investigators room to be thorough. They can trace every wire transfer. They can audit every tax return. They can interview every employee. They can connect every related entity. The comprehensive investigation that took months with Kethineni will take years with more complex schemes. Prosecutors have time to build the perfect case - one that captures not just the PPP fraud but everything the PPP fraud reveals.

Why Tech Founders Face Extra Scrutiny

If you're someone with multiple business entities - LLCs for different ventures, corporations for various projects, partnerships that overlap - you need to understand your exposure.

San Jose prosecutors view multi-entity structures as inherantly suspicious. In their experience, legitimate businesses don't need seven related companies submitting twelve PPP applications. The complexity suggests concealment. The volume suggests organized fraud.

Consider the math prosecutors do. A sole proprietor submits one fraudulent PPP application. Bad, but limited. A tech founder with four companies submits four applications. Worse - it shows scale and planning. A family with seven companies submits twelve applications. That's an enterprise. And enterprises get prosecuted under conspiracy laws that capture everyone involved.

The Kethineni case is the extreme example, but the principle applies to everyone with multiple entities. If you used different companies for different applications, prosecutors may argue you were trying to maximize fraud while minimizing detection. If family members were involved, prosecutors may argue you were running a criminal enterprise. Your corporate sophistication becomes evidence of criminal sophistication.

And prosecutors know exactly how to connect your entities. They pull records from the California Secretary of State. They trace corporate officers and registered agents. They identify common addresses, common banks, common accountants. They map the relationships between every entity you ever formed. The portfolio you built becomes the conspiracy chart they present to the jury.

Silicon Valley culture makes this worse. Tech entrepreneurs are taught to build networks. To leverage relationships. To scale operations. To involve family in business ventures. Everything that makes you successful in the startup world makes you vulnerable in the criminal justice system. The mentor who advised you to create multiple LLCs for liability protection? That advice created multiple avenues for prosecution. The family members you brought into your ventures? Those relationships now create conspiracy exposure.

Here's the part that should concern you most. Your family members and business partners might already be cooperating. If prosecutors approach your brother about his PPP applications, he has every incentive to provide information about your applications. Family loyalty doesn't survive federal prosecution. Business partnerships dissolve when prison time is on the table.

Every day you wait, prosecutors connect more of your entities. Every relationship they trace adds to the conspiracy evidence. Every family member they interview potentialy becomes a cooperating witness. The comprehensive picture of your corporate network builds while you do nothing. And in the Northern District of California, with the most sophisticated financial investigators in the federal system, that picture gets complete faster than anywhere else in the country.

At Spodek Law Group, Todd Spodek has handled hundreds of federal fraud cases. The tech founders who call before prosecutors finish mapping there corporate networks have options. Strategic disclosure. Cooperation positioning. Arguments about which entities were actualy related versus merely coincidentally similar. The tech founders who call after the network map is complete are fighting conspiracy charges with overwhelming evidence.

Call 212-300-5196 before prosecutors finish connecting your corporate entities. Not becuase we're trying to scare you into hiring a lawyer. Becuase in San Jose, with portfolio prosecution and compound discovery and conspiracy charges that capture every related entity, the corporate structure you thought protected you could be the evidence that destroys you.

Spodek Law Group. The Woolworth Building, 233 Broadway Suite 710, New York. We put this information on our website becuase most tech founders have no idea that there corporate portfolios are the primary evidence against them. Our goal isnt to frighten you. Its to make sure you understand that San Jose prosecutors dont just charge individual frauds - they charge networks. And network charges mean network sentences.

In San Jose, your company portfolio is your criminal portfolio. And every entity you used for PPP applications becomes another count in your federal indictment. The more companies you have, the more criminal exposure you face.