Vermont PPP Loan Fraud Defense Lawyers

The PPP loan forgiveness application is where most Vermont defendants get destroyed. You receive the loan in 2020 or 2021, you use it however you used it, and then eight to twelve months later you apply for forgiveness. That application requires you to certify - under penalty of perjury - that every dollar went to authorized expenses. When prosecutors later prove you bought cryptocurrency, paid personal expenses, or lied about payroll, that forgiveness application becomes Exhibit A proving criminal intent. The program was designed to forgive loans. But the forgiveness process became the confession.

This is the reality Spodek Law Group has been explaining to clients facing federal PPP fraud investigations in Vermont. The forgiveness application isn't relief - its the moment you hand prosecutors everything they need to convict you. And Vermont's Burlington federal court is applying the exact same aggressive sentencing guidelines as Manhattan, Chicago, or any other federal district.

If you or someone you know is facing a PPP fraud investigation in Vermont, understanding the prosecution timeline and the evidence prosecutors are building against you is the difference between negotiating from strength and pleading guilty to charges that could have been avoided. Call Spodek Law Group at 212-300-5196 for a confidential consultation with experienced federal defense attorneys who have handled pandemic fraud cases nationwide.

Vermont's PPP Prosecutions Aren't Slowing Down - They're Accelerating

Vermont's U.S. Attorney Nikolas Kerest publicly stated that pandemic fraud is a priority for his office. That wasn't a press release - that was a warning. Your $50,000 PPP loan isn't too small to prosecute. Your case becomes a press release proving his office is tough on fraud, and in a state with fewer than 650,000 people, every prosecution gets media attention.

The statute of limitations for PPP fraud is ten years. Congress extended it specifically for pandemic-related fraud. If you recieved a PPP loan in 2021, your at risk until 2031. Prosecutors in Burlington are just getting started. Jennifer Stocker was sentenced in March 2024. Leon Delima got 46 months. Bounthavong Sonthikoummane and Ashlyn Arcouette were indicted in June 2024. These arent historical cases - their happening right now.

The small state paradox works against you. Vermont has fewer PPP cases than California or Texas, which means each case gets more attention from federal prosecutors who have quotas to meet. Less volume doesn't mean less scrutiny. It means your case becomes the example prosecutors use to demonstrate their office is serious about pandemic fraud enforcement. And the 10-year statute of limitations means were only halfway through the prosecution window.

The Forgiveness Application Is Where Criminal Intent Gets Proven

The PPP loan forgiveness application is the moment you confess. Everything before that - the initial application, the bank deposit, how you spent the money - might be defensible as confusion, mistake, or misunderstanding of vague SBA guidance. But when you sign that forgiveness application certifying under penalty of perjury that you used funds properly, your telling prosecutors "I knew the rules, I followed them, and I'm swearing to it." When they later prove you lied, that signature becomes proof of criminal intent.

Here's how the trap works. The forgiveness application requires specific representations:

• Payroll costs
• Number of employees
• Mortgage interest
• Rent
• Utilities

You certify - under penalty of perjury - that the information is true and correct. Prosecutors then subpoena your bank records, your tax returns, your Coinbase transaction history. They prove you transfered $117,000 to cryptocurrency exchanges. They prove you had zero employees but claimed payroll. They prove you spent $17,833 "over approximately two weeks on consumer goods and non-business items." And then they pull out your forgiveness application with your signature certifying everything was legitimate.

That signed forgiveness application becomes Exhibit A in the criminal trial. Not the original PPP loan application - the forgiveness application. Because the forgiveness application came after you spent the money. It proves you knew what you did and lied about it anyway. The very process designed to provide relief became the evidence generator for prosecution.

The SBA and DOJ designed it that way. A simple attestation might not hold up as proof of intent in court. But a certification under penalty of perjury - with specific representations about payroll amounts, employee counts, and authorized expenses - becomes a signed confession that prosecutors can use to prove you KNEW the rules and CHOSE to violate them. The forgiveness process wasn't just about loan relief. It was about building criminal cases.

In the Vermont case against Sonthikoummane and Arcouette, prosecutors are using the forgiveness applications as proof of intent because defendants certified compliance after already spending PPP funds on Coinbase investments. The forgiveness application didn't forgive anything. It confessed everything.

81.8% Conviction Rate Means the Question Isn't If - It's How Much Time

Federal prosecutors don't bring cases their not certain they'll win. The conviction rate for PPP fraud across federal districts is 81.8%. In Vermont's Burlington federal court, the pattern is even more stark - judges have seen cryptocurrency investments, false payroll claims, and personal expenses dozens of times. Their not buying the "it was confusing" defense anymore.

Judge Geoffrey Crawford sentenced Jennifer Stocker knowing she'd been convicted of fraud before. Four months in prison plus 30 days consecutive for violating her probation from a 2018 fraud conviction. Leon Delima got 46 months for spending $17,833 over two weeks. The loss amounts were small compared too national cases, but the sentences were real Bureau of Prisons custody - not probation, not home confinement, but actual federal prison time.

IRS Criminal Investigation reports a 98.5% conviction rate in COVID fraud cases they prosecute. If IRS-CI is investigating your PPP loan, your almost certainly getting convicted. The question isn't whether you'll be found guilty. The question is whether you'll plead to wire fraud with an 18-27 month guideline range or go to trial and face 20-year maximum exposure.

Burlington's federal court is the only federal court in Vermont. Every PPP fraud case goes before the same judges who've already seen this pattern. Your not explaining cryptocurrency investments to a naive jury. Your explaining it to Judge Crawford, who sentenced Stocker and Delima and knows exactly what Coinbase transactions mean. The judges have pattern recognition now. And the pattern is: PPP funds to crypto exchanges = criminal intent.

81% of convicted PPP fraud defendants receive prison time. Probation is not the likely outcome. The Bureau of Prisons is. Understanding this math before your indicted is the only way to negotiate from a position where you have any leverage at all.

Why Prosecutors Charge 20 Years When They'll Settle for 18 Months

Federal prosecutors charge wire fraud (20 years maximum) and bank fraud (30 years maximum) for the same conduct. They know your going to plead to false statements (5 years maximum). The initial charges arent what they expect you to serve - their negotiating tools.

Here's the leverage game. Prosecutors indict you for wire fraud, bank fraud, and money laundering. Your looking at 30+ years on paper. Your attorney explains that going to trial with an 81.8% conviction rate and a signed forgiveness application as Exhibit A is professional malpractice. So you negotiate. Prosecutors offer to drop the bank fraud and money laundering charges if you plead guilty to wire fraud. You think your getting a deal. But wire fraud still carries 18-27 months under the sentencing guidelines for $100,000 loss amount.

The charge stacking creates the pressure. You can legally buy a house with PPP loan funds if your a sole proprietor paying yourself. But prosecutors treat any real estate purchase as proof of fraud, and juries convict on it. Cryptocurrency investments are completely legal. But transfering PPP funds to Coinbase gets treated as near-automatic proof of criminal intent. Prosecutors argue "legitimate businesses dont invest payroll in crypto" - and judges agree.

In the Sonthikoummane and Arcouette case, prosecutors are seeking forfeiture of a house in White River Junction. The criminal case and the civil asset forfeiture run on parallel tracks. You lose the house while fighting the criminal charges. By the time your negotiating a plea, the leverage is entirely on the prosecution's side. They've already seized your assets. They've already stacked charges carrying decades of exposure. And they've got your signed forgiveness application certifying everything was legitimate.

The rules were vague enough to allow personal draws, real estate investments, and flexible use of funds for sole proprietors. But prosecutors dont argue the rules - they argue intent. And juries presented with Coinbase transactions and luxury purchases convict, irrespective of whether the SBA guidance was clear.

First-Time Offender Doesn't Mean Probation - Loss Amount Determines Everything

First-time offender status is supposed too help at sentencing. In most criminal cases, it does. But in PPP fraud cases, it means almost nothing. A first-time offender with $100,000 fraud faces 18-27 months in federal prison. Not probation. Not home confinement. Actual Bureau of Prisons time.

The sentencing guidelines for fraud are based on loss amount. Your criminal history matters, but the loss amount matters ten times more. Leon Delima spent $17,833 over approximately two weeks on consumer goods. He got 46 months. The speed of spending proved criminal intent - prosecutors argued that someone who burns through an entire PPP loan in 14 days wasn't running a legitimate business.

The loss amount is the entire loan, even if you spent some of it legitimately. If you received $100,000 and spent $30,000 on actual payroll but $70,000 on cryptocurrency, prosecutors calculate the loss as $100,000. They dont prorate based on legitimate versus improper use. The forgiveness application certified the entire amount was proper, so the entire amount becomes the fraud loss for sentencing purposes.

Jennifer Stocker got four months despite being a first-time offender on the PPP charge. But she had a prior 2018 fraud conviction and violated her probation. Repeat offender patterns lead too consecutive sentences even on small amounts. The judges are seeing defendants who defrauded unemployment, PPP, and EIDL programs simultaneously. The pattern of pandemic fraud - not just one isolated PPP loan - drives sentencing.

The more documentation you provided on your forgiveness application, the stronger the prosecution case against you. Detailed records prove you knew the requirements and violated them intentionally. Sloppy applications with minimal documentation might look like negligence. But if you attached spreadsheets showing payroll calculations, employee rosters, and expense breakdowns - and prosecutors later prove it was all fabricated - that detail becomes evidence of sophisticated fraud.

Vermont defendants cant rely on first-time offender status to avoid prison. The loss amount, the forgiveness application, and the pattern of spending determine the sentence. And Burlington federal judges have seen enough PPP cases too know the difference between confusion and theft.

By the Time You Get the Audit Letter, the FBI Already Has Your Bank Records

The SBA audit letter isnt the beginning of the investigation. Its the end of the covert phase. By the time you receive a letter requesting documentation for your PPP loan forgiveness, the FBI has already subpoenaed your bank records, reviewed your tax returns, and identified the red flags that triggered the referral too the Department of Justice.

Here's the investigation timeline that works against you:

1. You apply for forgiveness
2. SBA approves
3. You think your clear
4. Eight months later, the SBA Office of Inspector General flags your account based on data analytics
5. FBI serves grand jury subpoenas (you don't know this is happening)
6. Investigation runs for 6-12 months before you receive any notification
7. You finally get the audit letter - but the criminal case is already built

The bank that approved your PPP loan is the same bank that filed the Suspicious Activity Report that triggered your investigation. They gave you the money, then reported you too FinCEN, which referred the case to the FBI. Banks have to file SARs for transactions that look like fraud. PPP funds moving to Coinbase within days of deposit trigger automatic SAR filings. Your bank isn't on your side - their protecting themselves from regulatory liability.

Once the FBI gets involved, they serve grand jury subpoenas for records. You dont know this is happening because grand jury proceedings are secret. The bank cant tell you they've been subpoenaed. Coinbase cant tell you. Your accountant cant tell you. The investigation runs for 6-12 months before you receive any notification. And when you finally get the audit letter from SBA OIG, the criminal case is already built.

Prosecutors have your bank records showing exactly were the money went. They have your tax returns showing your actual payroll. They have your Coinbase transaction history showing crypto purchases. They have your forgiveness application certifying everything was legitimate. The audit letter is a courtesy - a chance for you too cooperate before the indictment is filed. But cooperation at that stage means confession. Your already under investigation. The evidence is already gathered. The audit letter is prosecutors giving you an opportunity too plead guilty before they indict.

Ignoring the audit letter makes it exponentially worse. SBA refers non-responsive cases to DOJ as high-priority prosecutions. The non-cooperation gets treated as consciousness of guilt. And prosecutors file wire fraud, bank fraud, and money laundering charges seeking forfeiture of assets. By the time your indicted, the case is public record, media coverage in Vermont makes it regional news, and your employer knows about the charges before you've even hired an attorney.

Talking to FBI Without an Attorney Adds 5 Years to Your Exposure

The biggest mistake Vermont defendants make is talking too federal agents without an attorney present. FBI agents arrive at your home asking about your PPP loan. You explain "it was confusing" and "I thought payroll included myself as the owner." Those statements become the basis for additional charges under 18 USC 1001 - false statements to federal agents. That statute carries five years maximum.

Here's how the trap works. Agents write an FD-302 report documenting your statements. They note inconsistencies with your forgiveness application. You said you had three employees. Your forgiveness app said five. You said you spent money on equipment. Your bank records show Coinbase. Those inconsistencies become false statements charges that get added too the original wire fraud charge.

The original case might have been negotiable to false statements (five years max). But now your facing wire fraud (20 years) plus obstruction or false statements to agents (five years). The charges stack. And your own words eliminate your ability to claim the Fifth Amendment at trial. Prosecutors read the FD-302 report too the jury showing you "changed your story" when confronted with evidence.

Statements to federal agents also trigger obstruction of justice enhancements at sentencing. If the judge finds that you lied to investigators, the sentencing guidelines increase by two levels. That adds 6-12 months too the prison recommendation. What started as an 18-month guideline sentence becomes 24-30 months because you talked without an attorney.

Paying back the PPP loan doesnt eliminate criminal liability - it can make things worse. Prosecutors argue repayment shows "consciousness of guilt" and proves you knew it was fraud. If you repay the loan after receiving a target letter or audit letter, prosecutors can charge obstruction under 18 USC 1512 for attempting too impede the investigation by eliminating the financial evidence.

The defense attorneys who get the best outcomes for Vermont PPP fraud clients are the ones who get involved before any statements are made too investigators. Once you've talked to the FBI, your defense options narrow. The FD-302 report becomes prosecution evidence. And the false statements charge eliminates the "good faith mistake" defense that might have been available.

If you receive an SBA audit letter, a target letter from the U.S. Attorney's Office, or a visit from FBI agents, do not respond without consulting a federal defense attorney. Every word you say gets used against you. And in a system with an 81.8% conviction rate, giving prosecutors additional evidence is professional suicide.

Small State, Same Federal Consequences - What Vermont Defendants Need to Know

Vermont is a small state, but federal prosecution doesnt care about geography. Burlington's federal courthouse applies the exact same sentencing guidelines, the same wire fraud statutes, and the same aggressive DOJ priorities as Manhattan's Southern District of New York. Small state doesnt mean small consequences.

Vermont has one federal courthouse. Every PPP fraud case - every target letter, every indictment, every sentencing hearing - happens in the same building in Burlington. The prosecutors know the judges. The judges know the defense attorneys. And everyone knows the pattern by now: PPP funds to cryptocurrency, false payroll claims, personal expenses disguised as business costs.

The federal system is uniform. U.S. Sentencing Guidelines apply nationwide. A defendant with $100,000 fraud in Vermont faces the same 18-27 month guideline range as a defendant with $100,000 fraud in Chicago. Vermont judges dont have discretion too ignore the guidelines just because the state has a small population. Judge Crawford sentenced Stocker and Delima following the exact same loss amount calculations that judges in major metropolitan districts use.

Recent Vermont PPP Fraud Cases

Jennifer Stocker, New Haven, Vermont - sentenced March 2024 to four months in prison plus 30 days consecutive for violating probation from her 2018 fraud conviction. The SBA approved her loan. The SBA granted her forgiveness in full. And then she was prosecuted and sentenced too federal custody. Approval and forgiveness dont create immunity - they create evidence that you lied to a federal agency.

Leon Delima, Burlington, Vermont - 46 months for spending $17,833 over approximately two weeks on consumer goods. The loss amount was tiny compared to national cases were defendants stole millions. But the speed and nature of spending proved intent. Prosecutors argued - and Judge Crawford agreed - that burning through an entire PPP loan in 14 days on non-business expenses showed criminal intent from the start.

Bounthavong Sonthikoummane and Ashlyn Arcouette - indicted June 2024 for transfering $117,000 and $56,900 too Coinbase. Prosecutors are seeking forfeiture of a house in White River Junction. The criminal case and civil forfeiture are running simultaneously. By the time their case goes too trial or plea, they'll have lost the house regardless of the outcome.

The Vermont cases follow the exact same pattern as national prosecutions: cryptocurrency investments get treated as automatic proof of fraud, forgiveness applications become signed confessions, and loss amounts drive sentencing regardless of criminal history. Vermont defendants who think the small state provides protection are making a catastrophic error. Federal court is federal court. The district doesnt matter.

What Spodek Law Group Does for Vermont PPP Fraud Clients

Spodek Law Group represents clients facing federal PPP fraud investigations nationwide, including defendants in Vermont's Burlington federal court. Our approach is built on understanding the prosecution timeline, the evidence prosecutors are gathering, and the narrow window were early intervention can change the outcome.

We get involved before statements are made too investigators. If you receive an SBA audit letter, a DOJ target letter, or a visit from FBI agents, we handle all communication. We prevent the false statements charges that get added when clients try too explain their way out of investigations. And we negotiate with prosecutors from a position were cooperation might still provide value - before the indictment is filed and the case becomes public.

Our attorneys have handled pandemic fraud cases involving wire fraud, bank fraud, false statements, and money laundering charges. We understand the sentencing guidelines, the loss amount calculations, and the mandatory minimums that apply in PPP cases. We know how prosecutors use forgiveness applications as evidence. And we know which arguments work in Burlington federal court and which ones judges have already rejected dozens of times.

Todd Spodek and the Spodek Law Group team work with clients too identify potential defenses, negotiate charge reductions, and structure plea agreements that minimize prison exposure. In cases were the evidence allows, we fight. In cases were the math doesnt support trial, we negotiate the best possible resolution before the government adds additional charges.

The ten-year statute of limitations means Vermont prosecutions will continue through 2030-2033. If you received a PPP loan and used funds in ways that might not align with SBA guidance, the risk doesnt decrease over time - it increases as prosecutors work through the backlog of cases flagged by data analytics and Suspicious Activity Reports.

Federal PPP fraud defense requires attorneys who understand both the federal system and the specific patterns prosecutors are using in pandemic fraud cases. This isnt a general criminal matter. Its a federal prosecution with mandatory sentencing guidelines, charge stacking leverage, and a conviction rate that makes trial a last resort.

If you or someone you know is facing a PPP loan fraud investigation in Vermont, contact Spodek Law Group at 212-300-5196 for a confidential consultation. We represent clients in Burlington federal court and handle all phases of federal fraud defense - from pre-indictment negotiation through trial if necessary.

Time matters in these cases. The earlier we get involved, the more options you have. Once your indicted, the leverage shifts entirely too the prosecution. Call 212-300-5196 today.