Texas PPP Loan Fraud Lawyers

The fastest way to prove you committed PPP loan fraud is to repay the loan. That sounds backwards, but federal prosecutors have turned repayment into what they call "consciousness of guilt" evidence. If you didn't know you did anything wrong, why would you rush to return the money? Your repayment becomes Exhibit A at your trial. This isnt a civil recovery issue where you pay it back and move on. It's a federal prosecution engine where 81.8% of defendants are convicted, and 81% of those sentenced receive prison time—including first-time offenders with completely clean records who thought they were doing the right thing by cooperating.

The emergency program created to help businesses survive the pandemic became a 10-year federal prosecution pipeline. Your 2020 loan can be investigated and prosecuted until 2030. The COVID-19 Fraud Enforcement Task Force has guaranteed funding through 2031, which means enforcement will continue aggressively for years. And the trend is moving in the wrong direction: defendants sentenced in 2024-2025 are receiving prison terms that are 40% longer on average than defendants sentenced for identical conduct in 2021-2022. The further we get from the pandemic emergency, the harsher the sentences become.

At Spodek Law Group, we defend clients facing federal PPP fraud investigations and prosecutions in Texas and nationwide. Our mission is to provide education about how the federal system actually works—not how people think it works. Todd Spodek and our team have seen how prosecutors weaponize cooperation, how repayment destroys defenses, and how talking to investigators without an attorney creates additional federal felonies. If your facing a PPP fraud investigation in Texas, understanding what you're actually up against is the first step. Call us at 212-300-5196.

The System Was Built Without Guardrails, Then Prosecuted Like Bank Robbery

Congress didn't create new criminal statutes specificaly for pandemic relief fraud. Instead, the Department of Justice is using existing federal fraud laws that were designed for completley different crimes—laws that carry maximum sentences of 20 to 30 years in federal prison.

PPP loan fraud is prosecuted under the same bank fraud statute (18 U.S.C. § 1344) that's used when someone walks into a bank with a gun and demands money. The same statute. The same 30-year maximum sentence. Emergency pandemic relief for struggling businesses is treated, legally, the same way as armed robbery of a financial institution.

And prosecutors stack these charges. Each fraudulent document you submitted can be charged as a separate count. Your PPP loan application is one count of bank fraud. Your loan forgiveness application is another count of wire fraud. If you spent the money on non-payroll expenses, that's money laundering. If you talked to FBI investigators and got a single date or number wrong, that's making false statements to federal agents under 18 U.S.C. § 1001—another 5 years.

A business owner who took out a $100,000 PPP loan and spent some of it on rent instead of payroll could be facing exposure of 70+ years in federal prison across multiple counts. Seventy years for a pandemic relief loan.

The SBA designed the program with almost no verification requirements. The agency explicitly told lenders they "may rely on borrower representations" and would not be required to "independently verify the borrower's reported information." The entire system was built to deploy money as fast as possible during what one defense attorney called "apocalyptic uncertainty when the SBA website crashed hourly and guidance changed daily."

But after businesses took loans under those chaotic conditions, prosecutors applied the harshest federal fraud statutes in the criminal code. The guardrails were removed on the front end, then the hammer came down on the back end.

Why Repaying the Loan Is the Worst Thing You Can Do

If your facing a PPP fraud investigation, every instinct you have will tell you to fix it by repaying the money. You'll think: "I'll just give it back, explain it was a mistake, and this whole thing will go away."

That instinct will destroy your defense.

Federal prosecutors have discovered that businesses that voluntarily repay PPP loans essentially confess to fraud. The legal doctrine is called "consciousness of guilt," and it's one of the most powerful pieces of evidence a prosecutor can present to a jury. The argument goes like this: if you didnt know you did anything wrong, why would you rush to return the money? Your repayment—the thing you thought would demonstrate good faith—becomes proof that you knew the loan was fraudulently obtained.

A January 2025 Department of Justice report revealed the strategy explicitly. Prosecutors are targeting "technical violators" who voluntarily repaid because, in their words, "there's no need to prove intent when the defendant already 'admitted' guilt by repaying." They're not going after the people who are fighting and denying wrongdoing. Their going after the people who tried to cooperate.

Here's how it plays out in practice. You recieve a letter from the DOJ or the SBA Office of Inspector General asking questions about your PPP loan. You panic. You immediatly repay the full loan amount to show good faith. You think this demonstrates you weren't trying to steal from the government.

But the prosecutors document your repayment and add it to their evidence file. When your case goes to trial—or more likely, when your trying to negotiate a plea agreement—your defense attorney cant argue "my client believed the loan was legitimate" because your repayment contradicts that claim. The jury instruction will literally say: "Defendant's voluntary repayment may be considered evidence of guilty knowledge."

And if you included an explanation letter with the repayment? Every single word becomes evidence. That sentence where you explained there was "confusion about eligibility requirements"? Prosecutors will tell the jury it proves you knew you weren't eligible. That part where you said you "relied on your accountant's advice"? They'll argue it shows you knew the application was questionable, which is why you sought professional help to navigate it.

The DOJ's COVID-19 Fraud Enforcement Task Force specifically targets voluntary repayers because they've made the prosecutor's job easy. They don't need to prove intent when you've already demonstrated consciousness of guilt through your actions. You've handed them the conviction on a silver platter.

Unlike other federal crimes, where cooperation and restitution can lead to reduced charges or even civil resolutions, PPP fraud works backwards. Repayment doesn't make prosecution less likely—it makes conviction more certain. Your trying to do the right thing, and your actually building the case against yourself.

Even partial repayment creates the same problem. If you repay $50,000 of a $100,000 loan, prosecutors argue you've admitted to at least $50,000 in fraud. You can't selectively admit guilt for half the conduct and deny the other half. The moment you repay any amount, you've conceded that something was wrong with the loan.

The only scenario where repayment might help is if it's done as part of a negotiated resolution with prosecutors AFTER your attorney has already had extensive discussions with the government and determined that a plea agreement is the best path forward. At that point, restitution as part of sentencing can reduce your guideline range. But voluntary repayment before charges are filed, or during an investigation, is almost always a catastrophic mistake.

First-Time Offenders Serve the Same Time As Everyone Else

If you've never committed a crime in your life, your probably thinking that "first-time offender" status will protect you from prison. It wont.

Out of thousands of PPP fraud sentencing reports since 2020, only two defendants received probation. Two. Everyone else—regardless of criminal history, regardless of the amount, regardless of personal circumstances—received prison time.

The conviction rate for defendants charged with PPP fraud is 81.8%. That means if your charged, your odds of being found guilty are worse than Russian roulette with five chambers loaded. Of the 3,096 defendants charged as of December 31, 2024, a total of 2,532 have been convicted. And of the 2,143 defendants who've been sentenced, 1,741—thats 81%—received prison time.

"First-time offender" status in federal PPP fraud cases means almost nothing. It's the baseline—the starting point that the federal sentencing guidelines already assume. Your not getting credit for being clean. Your just not getting additional punishment for having priors.

The most important factor in federal sentencing—by far—is the loss amount. Not your criminal record. Not your personal circumstances. The dollar amount drives everything.

Here's how the math works. For a first-time offender with a $20,000 fraudulent PPP loan, the guidelines typically recommend 6 to 12 months in federal prison. Not probation. Prison. A $100,000 PPP fraud translates to 18 to 27 months in federal prison. A $1 million fraud? You're looking at 5 to 7 years, even with no criminal history.

And remember: there's no parole in the federal system. You serve at least 85% of whatever sentence the judge imposes. A 46-month sentence means your doing roughly 39 months before release.

The sentencing guidelines also include enhancements that can add levels. If you obstructed justice by deleting emails, that's another 2 levels. If the fraud involved sophisticated means—like using shell companies or falsified documents—thats another 2 levels. These enhancements stack. A first-time offender who deleted some emails after recieving a grand jury subpoena and used a couple of LLC's to apply for multiple loans can easily see there guideline range jump by 6 to 8 levels. What would have been an 18-month sentence becomes a 36-month sentence.

And here's the cruelest part: the trend is getting worse. Defendants sentenced in 2024 and 2025 are recieving prison terms that are 40% longer on average than defendants sentenced for identical conduct in 2021 and 2022. The window for leniency has closed.

First-time offenders keep thinking there record will save them. It won't. The system doesn't care that you've been a law-abiding citizen for 45 years. It cares about the loss amount and the sentencing guidelines calculation. Your clean record is just the starting point, and the starting point still ends in prison.

Texas PPP Sentences Are Among the Harshest in the Nation

If your facing a PPP fraud prosecution in Texas, you need to understand that federal courts in Texas are prosecution-friendly territory. Some of the longest sentences in the entire country have been handed down by Texas federal judges.

Michael and Tiffany Fullerton, a couple from Georgetown, Texas, were sentenced to a combined 32 years in federal prison for there roles in a PPP fraud scheme. Michael Fullerton received 286 months—thats nearly 24 years—for using one existing business and three dormant business names to submit six fraudulent PPP loan applications totaling more than $3.5 million. Five of those applications were funded, allowing them to receive approximately $3 million in PPP funds. Tiffany Fullerton was sentenced to 108 months, or 9 years. The couple was also ordered to pay $3,027,526.11 in restitution.

Let that sink in. Twenty-four years in federal prison for a PPP fraud case. Not a violent crime. Not a drug trafficking operation. A fraudulent pandemic relief loan.

Amir Aqeel, the head of a COVID-19 relief fraud ring in Houston, was sentenced to 15 years in prison and ordered to forfeit $5,583,111.48. He conspired with at least 14 other individuals to submit 75 fraudulent PPP loan applications in 2020. U.S. Attorney Alamdar S. Hamdani said, "Amir Aqeel engaged in one of the largest PPP conspiracies in the country." Fifteen years for leading a fraud conspiracy.

Stephanie Hockridge, a former TV anchor and co-founder of Blueacorn (a PPP loan processing company), was sentenced to 10 years in federal prison and ordered to pay nearly $64 million in restitution. A Texas federal judge handed down the decade-long sentence for her role in a sweeping COVID-19 relief fraud scheme. She went from being a public figure with a media career to serving ten years in federal prison.

Tamara Starks, a businesswoman from Mansfield, Texas, was sentenced to more than 7 years in federal prison—86 months—in connection with a fraudulent scheme to obtain approximately $8.5 million in forgivable PPP loans. She was also ordered to pay $4,476,523.73 in restitution.

These aren't outliers. These are the kinds of sentences Texas federal courts are imposing in PPP fraud cases. The Southern District of Texas, the Northern District of Texas, and the Western District of Texas have all seen aggressive prosecutions and substantial prison sentences.

Even defendants who cooperated, who expressed remorse, who had no prior criminal history, are receiving years in federal prison. A Houston-area defendant who fraudulently obtained $913,000 in PPP loans was sentenced to 46 months (nearly 4 years) and ordered to pay $962,438 in restitution. A Cincinnati defendant—prosecuted in federal court but relevant for comparison—received 18 months for a $21,000 PPP loan fraud. Eighteen months for twenty-one thousand dollars.

Texas federal prosecutors are not interested in slaps on the wrist. They're not offering sweetheart deals. The DOJ's focus on pandemic fraud has been relentless, and Texas has been one of the most active enforcement jurisdictions in the country.

Part of the reason Texas sentences are so harsh is the volume of fraud cases that have come out of the state. The Southern District of Texas, which includes Houston, has prosecuted multiple large-scale PPP fraud conspiracies involving millions of dollars and dozens of defendants. In one case, 16 defendants were convicted of conspiracy to fraudulently obtain PPP loans, with the lead planner sentenced to 15 years. When courts are seeing case after case after case, judges become less sympathetic. The "this was a one-time mistake" argument loses its power when the court has heard it a hundred times already.

There's also a cultural component. Federal judges in Texas tend to be more conservative and more skeptical of fraud defendants who claim they didn't understand the rules or relied on bad advice. The prevailing attitude is: "You knew what you were doing. You took taxpayer money. Now you face the consequences."

If you're under investigation for PPP fraud in Texas, you cannot afford to assume you'll get a lenient sentence. The data says otherwise. The track record says otherwise. You need to prepare for the real possibility of significant prison time, and you need a defense attorney who understands how Texas federal courts operate.

The 10-Year Statute of Limitations Means This Isn't Going Away

Most people assume that if they haven't been charged within a few years of taking out a PPP loan, there probably safe. That assumption is wrong.

In 2022, Congress passed the PPP and Bank Fraud Enforcement Harmonization Act, which extended the statute of limitations for PPP fraud from 5 years to 10 years. The law was passed with bipartisan support and signed by President Biden specifically to give fraud investigators additional time to identify and prosecute individuals and entities who committed PPP fraud.

What that means in practice: if you took out a PPP loan in 2020, you can be investigated and prosecuted for that loan until 2030. If you took out a loan in 2021, the statute doesn't expire until 2031. The COVID-19 Fraud Enforcement Task Force has guaranteed funding and a mandate to continue enforcement efforts through the 2030's.

This isn't a short-term enforcement wave that will fade as the pandemic becomes a distant memory. This is a permanent prosecution infrastructure with a ten-year runway.

And the trend is moving in the wrong direction for defendants. As mentioned earlier, defendants sentenced in 2024 and 2025 are receiving prison terms that are 40% longer on average than defendants sentenced for identical conduct in 2021 and 2022. Early defendants benefited from prosecutorial uncertainty, more lenient plea offers, and judges who were still calibrating their approach to these cases. But now, several years into the enforcement effort, prosecutors have refined their strategies. They know what works. They know juries convict at an 81.8% rate. They know judges are imposing substantial prison sentences. So there's no incentive to offer generous plea deals.

The longer the statute of limitations runs, the more time investigators have to build cases. And federal investigators are patient. They'll spend years tracing financial records, interviewing witnesses, analyzing bank statements, and building conspiracy cases that involve multiple defendants. A PPP loan you took out in 2020 and forgot about could result in a knock on your door from FBI agents in 2028.

The extended statute also means that the government can wait to see if you slip up. If you deleted emails in 2021, but the investigation doesnt start until 2026, your still facing obstruction of justice charges. If you made a false statement to your accountant or your bank in 2020, and investigators discover it in 2027, thats still prosecutable. The clock doesn't start running until the offense is complete, and for conspiracy charges, the offense isn't complete until the last act in furtherance of the conspiracy.

This creates a prolonged period of legal exposure. You might think your in the clear because it's been four or five years since you took out the loan, but your actually only halfway through the statute of limitations. And during that time, the SBA Office of Inspector General is continuing to audit loans, flag suspicious activity, and refer cases to the Department of Justice for criminal prosecution.

The SBA OIG estimated in June 2023 that $64 billion in PPP funds were fraudulently obtained. With that much money identified as potentially fraudulent, enforcement will continue aggressively for years. The Task Force needs to justify its existence and its budget, and the way it does that is by continuing to charge, convict, and sentence defendants.

So if you took out a PPP loan that you now realize might have issues—maybe you inflated payroll numbers, maybe you used the money for non-eligible expenses, maybe you applied for multiple loans using different entities—you can't just wait it out. The government can wait longer than you can.

Every Move You Make Without an Attorney Creates Another Federal Felony

Here's the thing about federal investigations that most people don't understand until it's to late: cooperation without an attorney doesn't help you. It buries you.

FBI agents show up at your business. They're polite. They say they just want to "clear some things up" about your PPP loan. They tell you your not the target of the investigation. They ask if you'd be willing to answer a few questions. You think: "I have nothing to hide. I'll just explain what happened and this will all go away."

So you talk. You explain that you relied on your accountant's advice. You mention that the SBA guidance was confusing. You try to remember the exact number of employees you had in February 2020. You estimate your payroll costs. You explain where the money went.

And in doing so, you've just created multiple additional federal felonies.

If you get a single fact wrong—if you misremember the date you applied for the loan, if you estimate your employee count and the number is off by two, if you say you spent the money on payroll when some of it actually went to rent—you've just committed making false statements to a federal agent under 18 U.S.C. § 1001. That's a separate felony. It carries a 5-year maximum sentence. And it's incredibly easy to prove because the FBI agents wrote down everything you said, and now there's a record of your statement that contradicts the documents.

It doesnt matter if the mistake was innocent. It doesn't matter if you were nervous and confused. The statute doesn't require intent to deceive—it just requires that you made a false statement to a federal agent during an investigation. And now you've handed prosecutors another charge to stack on top of the fraud charges.

Or maybe you don't talk to the FBI, but you realize the investigation is serious and you start trying to clean things up. You delete emails related to the PPP loan application. You throw away documents. You ask your accountant to destroy records. Your thinking: "These make me look bad. I'll just get rid of them."

Congratulations, you've just committed obstruction of justice under 18 U.S.C. § 1519. That statute makes it a federal crime to destroy documents with the intent to obstruct an investigation. The maximum sentence is 20 years. Twenty years for deleting emails.

And here's the cruel part: obstruction of justice is often easier for prosecutors to prove than the underlying fraud. They don't need to prove you actually committed fraud—they just need to prove you destroyed evidence with the intent to impede an investigation. The act of destruction itself is the crime. And it's treated as powerful evidence of consciousness of guilt, just like repayment.

Obstruction charges also trigger a sentencing enhancement. Under the federal sentencing guidelines, if you obstructed justice during the investigation, the court adds two levels to your offense level. That can add months or years to your sentence. What would have been an 18-month sentence becomes a 27-month sentence. And that's on top of any separate sentence for the obstruction charge itself, which can run consecutive to the fraud sentence.

Then there's the forgiveness application trap. A lot of PPP fraud cases don't just involve fraudulent loan applications—they also involve fraudulent loan forgiveness applications. You took out a PPP loan, spent the money, and then submitted a forgiveness application claiming you used the funds for eligible payroll expenses when you actualy used them for rent, equipment, personal expenses, or other non-covered costs.

Each fraudulent forgiveness application is a separate wire fraud count. Each one carries a 20-year maximum. And because the forgiveness application was submitted electronically, it's wire fraud. If you submitted multiple forgiveness applications for multiple loans, each one is a separate count. Prosecutors can stack these, creating massive sentencing exposure.

Here's a typical progression: You submitted a fraudulent PPP loan application (Count 1: bank fraud, 30-year max). You submitted a fraudulent loan forgiveness application (Count 2: wire fraud, 20-year max). You spent the money on non-eligible expenses (Count 3: money laundering, 20-year max). You talked to FBI agents and got a date wrong (Count 4: false statements, 5-year max). You deleted emails when you realized you were under investigation (Count 5: obstruction of justice, 20-year max).

One PPP loan has now turned into five federal felonies with a combined maximum exposure of 95 years in prison. And this isn't a hypothetical—this is exactly how prosecutors charge these cases. They stack every possible count to create overwhelming sentencing exposure, then offer a plea agreement to a single count or a reduced sentence in exchange for a guilty plea.

The plea leverage is enormous. If you're facing 95 years across five counts, a plea offer of 36 months on a single count sounds like a gift. But that 36-month sentence is still three years in federal prison for conduct that, if handled correctly from the beginning, might have resulted in a civil resolution or no charges at all.

The moment you realize you're under investigation—whether that's a letter from the SBA OIG, a grand jury subpoena, a call from an FBI agent, or an audit notice—you need to stop. Don't repay the loan. Don't talk to investigators. Don't delete anything. Don't ask anyone else to delete anything. Don't try to "fix" the situation.

Your first call should be to an attorney who handles federal criminal defense, specifically federal fraud cases. Not your business attorney. Not your accountant. Not a state court criminal defense lawyer who handles DUI's and drug possession cases. You need someone who understands how federal investigations work, how sentencing guidelines operate, and how to negotiate with federal prosecutors.

What You Should Do If You're Facing a PPP Fraud Investigation

If you're under investigation for PPP fraud, or if you think you might be, here's what you need to understand.

First: Don't do anything without talking to a federal criminal defense attorney. Don't repay the loan. Don't submit additional documentation. Don't respond to letters from the SBA OIG. Don't talk to investigators. Every action you take without legal advice creates risk.

Second: Understand that the federal system operates differently than state court. There's no bail in the traditional sense—there's pretrial detention or release on bond. There's no parole—you serve at least 85% of your sentence. Sentencing is driven by mathematical guidelines based primarily on loss amount, not your personal circumstances. And federal prosecutors have vastly more resources than state prosecutors. They can spend years building a case.

Third: Recognize that cooperation is a double-edged sword. In some federal cases, cooperation can lead to a reduced sentence under U.S.S.G. § 5K1.1. But cooperation in a PPP fraud case often means admitting guilt, providing testimony against co-conspirators, and still facing prison time. The decision to cooperate should only be made after careful consultation with your attorney and only if there's a clear benefit.

Fourth: Get a realistic assessment of your sentencing exposure. Your attorney should be able to calculate your likely guideline range based on the loss amount, any applicable enhancements, and your criminal history category. That number—not your hope for probation or leniency—is what you should expect. Federal judges sentence within the guidelines or close to them in the vast majority of cases.

Fifth: Don't assume that because other people did the same thing and haven't been charged, your safe. The SBA OIG and DOJ are still actively investigating PPP fraud cases. They have until 2030 or 2031 to conduct charge from 2020 and 2021. The fact that you haven't been charged yet doesn't mean you won't be.

Sixth: If you've already made mistakes—if you've already repaid the loan, or talked to investigators, or deleted documents—that doesn't mean the case is unwinnable. But it does mean your attorney has a harder job. Prosecutors will use those actions against you, but an experienced attorney can sometimes mitigate the damage or argue alternative explanations.

At Spodek Law Group, we've defended clients in federal fraud investigations for years. We understand how the federal system works. We know how prosecutors think. We know the sentencing guidelines inside and out. And we know that the decisions you make in the first days and weeks of an investigation can determine whether you go to prison or avoid charges altogether.

Todd Spodek founded the firm on the principle that every client deserves aggressive, informed representation and honest advice about what they're facing. We don't make promises we can't keep. We don't tell you what you want to hear. We tell you what the data says, what the law says, and what your realistic options are.

If your facing a PPP fraud investigation in Texas—whether it's in Houston, Dallas, Austin, San Antonio, or anywhere else in the state—call us at 212-300-5196. The consultation is confidential. We'll review your situation, explain your exposure, and help you understand what comes next.

The federal government has built a prosecution machine designed to win. An 81.8% conviction rate and an 81% imprisonment rate aren't accidents. There is the result of a system that's optimized for processing defendants efficiently. The only way to fight back is with someone who understands how that system works and knows how to navigate it.

Don't wait until you're charged. Don't wait until the FBI shows up at your door. Don't wait until you've already made mistakes that can't be undone. The earlier you get representation, the more options you have.

Your future is on the line. Your freedom is on the line. This isn't something you handle on your own. Call Spodek Law Group at 212-300-5196.