What Is the Penalty for Lying on a PPP Loan Application?

You came here looking for a number. How many years in prison? How many dollars in fines? You want to calculate your worst-case scenario and figure out whether to panic or not.

At Spodek Law Group, we understand that moment. The 2am search when sleep is impossible. The desperate need to know exactly how bad things could get. Todd Spodek has represented clients facing federal charges for over two decades, and the question you're asking right now is one he's heard hundreds of times.

But here's what those penalty numbers don't tell you. And it's the thing that matters most.

The Numbers Everyone Quotes Miss The Real Danger

Thirty years. That's the number you probably found already when you started researching PPP loan fraud penalties. Bank fraud under 18 USC 1344 carrys up to 30 years in federal prison and fines up to one million dollars. Wire fraud can bring 20 years, or 30 years if the fraud affects a financial institution. Making false statments to the SBA or a bank also carrys 30 years.

Let those numbers sit with you for a second.

But heres were most articles stop. They give you the statutory maximums like there handing you a weather forcast. Chance of prison: severe. And then they move on.

OK, so let's talk about what these numbers actually mean for someone in your situation. The statutory maximum is almost never what someone receives. Federal sentancing guidelines consider the amount of money involved, wheather you have prior convictions, if you cooperated with investigators, and dozons of other factors. A person who fraudulently obtained $50,000 faces diferent consequences than someone who stole $5 million.

But the real danger isnt the number of years. Its everything that happens before sentancing even becomes relevent. The investigation process itself destroys lives. Asset freezes that shut down your buisness. Professional license reviews that end careers. Public exposure that ruins reputations. And all of this happens while your still technicaly innocent.

Take the Fullerton case from Texas. Michael and Tiffany Fullerton submited aproximately $3.5 million in fraudulent PPP applications. They bought a motor home, luxury watches, a boat. Thats the story prosecutors told, anyway. Michael recieved 286 months. Nearly 24 years. His wife got 108 months. Thirty-two years combined for one couple.

Thats the headline penalty. Its not the one you should be scared of.

But The Investigation Started Before You Knew

Heres the part that keeps attorneys up at night. By the time you're googling PPP penalties, the investigation may already be months ahead of you.

Think about this carefully.

The PPP program was designed for speed. No verification. Self-certification. Money out the door in days. The government wanted to get funds to businesses fast, and they did. But that same system created a perfect paper trail. Every application is documented. Every bank transfer is recorded. Every certification you signed is sitting in a database.

Your bank already reported to the SBA. Required reporting. They didnt call you to let you know. Your tax returns from 2019 and 2020 are already cross-referenced against the payroll numbers you claimed. The SBA Office of Inspector General has algorithms that flag discrepencys automaticaly.

Heres were it gets worse.

The DOJ isnt randomly selecting cases. There using data analytics to identify paterns of fraud. There looking at which applications dont match tax records. There cross-refrencing payroll claims with actuall W-2s filed. There following the money to see if you bought a Lamborghini two weeks after your loan hit.

You don't know you're being investigated until they want you to know. A subpoena to your bank. A grand jury impanelled in your district. Agents showing up at your business. By then, there six months into building the case.

Do not talk to federal agents without an attorney present. Even if they seem freindly. Especialy if they seem freindly.

The statistical argument that DOJ cant prosecute everyone is true. They cant chase millions of applications. But the question isnt wheather most people get caught. It's whether you specifically are already flagged. And you wont know untill its too late.

How A Single Application Becomes Twenty Federal Counts

One application. Thats all you submited. Maybe you inflated payroll numbers a bit. Maybe you included employes who werent realy on payroll. Maybe you created a buisness entity that didnt exist before the pandemic. One application.

Now lets talk about what prosectors actualy charge.

Each email you sent confirming you recieved the funds? Thats potentialy wire fraud. Each form you signed at the bank? Bank fraud. The application itself with false statments? Thats 18 USC 1014, false statments to a financial institution. If you used anyone elses information to bolster your application, add aggrivated identity theft which carries a manditory two year consecutive sentance.

Heres were the math gets terryfing.

Prosecutor can charge wire fraud for every electronic comunication related to the fraud. Five emails? Five counts. Ten? Ten counts. They can charge you seperately for the application submission, the forgiveness application, and every certification you signed along the way. A single PPP loan can generate 15 to 20 federal counts without prosecutors even trying hard.

And then theres conspiricy. If you worked with an accountant, a bookkeeper, anyone who helped prepare the application, both of you can be charged with conspiracy to defraud the United States. Renetta Golden-Larimore of Kansas City prepared 43 false PPP applications. Twenty-one other people were charged and convicted in conection with her scheme. Your fraud dosent just implicate you. It cascades to everyone involved.

One application. Twenty federal counts. Thats how this works.

The Sentancing Window Is Getting Worse Not Better

Maybe you thought the pandemic would help. Emergency times. Desparate mesures. Surely judges understand that buisnesses were strugling and people made mistakes under pressure.

Heres the kicker.

Defendants sentenced in 2024 and 2025 receive prison terms 40% longer on average than those sentenced in 2021 and 2022 for identical conduct. The pandemic sympathy window didnt just close. It slammed shut.

Read that again.

Federal judges in 2025 include prison time in nearly every PPP and EIDL fraud sentencing, regardless of the amount involved. People go to prison for $20,000 PPP fraud. The "small amount" defence dosent work anymore. Judges have seen thousands of these cases now. The excuses all sound the same. The sympathy has evaporated.

This is the oh god moment. If you've been waiting hoping things would get better with time, you've been operating under a lethaly wrong assumption. Every month you delay, sentancing trends get harsher. The statue of limitations for some charges extends to 2026 for loans originating in 2020. Prosecutors have time. Your running out of it.

Waiting is not a stratagy. It is making your situaton actively worse.

Criminal Acquital Doesnt End The Nightmare

Lets say you beat the criminal charges. Lets say you go to trial and a jury finds you not guilty. You've won. Right?

This is the part most articles wont tell you.

The False Claims Act is civil, not criminal. Different burden of proof. Different standard. In criminal court, prosecutors must prove guilt beyond a resonable doubt. In civil court under the FCA, the government only needs to show a preponderance of evidence. More likely than not.

You can beat criminal charges at trial and then lose everything to civil penaltys based on the same conduct. The False Claims Act allows the government to recover three times the amount of damages plus penaltys of over $11,000 per false claim. Triple damages. For every false certification on your application.

DOJ dosent have to chose between criminal and civil. They can pursue both. And there doing exactly that in 2025. Even if criminal prosecution seems unlikely, civil enforcement is expanding agresively.

Qui tam whistleblower suits add another layer. Anyone who knows about your fraud can file a complaint and recieve 15 to 30 percent of whatever the government recovers. Your former employe who helped with the application? Your ex-buisness partner? Your accountent? They all have finantial incentive to report you.

Criminal acquital dosent mean you won. It means one fight is over. The others are just begining.

The Difference Between Jail Time And A Civil Setlement

OK so where does this leave you. The penaltys are severe. The investigation may already be underway. Sentences are getting harsher. Civil liability follows you even after a criminal acquittal.

Is there any good news?

Heres what most people dont realize about federal defence work.

An experianced federal defence attorney can potentialy steer a case toward civil dispostion instead of criminal prosectuion. Same facts. Same application. Completly diferent outcome based on when you act and who represents you.

Early intervention matters more than almost anything else. Before charges are filed, a skilled attorney can engage with prosecutors, present mitigating evidence, negotiate voluntary repayment, and potentially resolve the matter without criminal charges. This isn't guaranteed. Nothing in federal law is guarenteed. But the window for this kind of resolution closes fast.

Todd Spodek has navigated these exact situatons. The negotiatoins that happen before indictement. The conversations with AUSAs about whether criminal prosecution is the right outcome. The difference between a client who acts immediately and one who waits can be measured in years. Of freedom.

What prosecutors want most is restitution and accountability. Sometimes they can get that without a trial. Sometimes a civil settlement satisfies their mandate. But they need to believe you're taking the matter seriously, and that starts with having proper legal representation from day one.

Why The Next 72 Hours Matter More Than The Next 5 Years

Your probly wondering what to do right now. You've read about penalties, investigations, charge stacking, and civil liability. Your head is spinning with worst-case scenarios.

Heres the reality.

The statue of limitations is counting down. For wire fraud, its five years from the last act of fraud. For some PPP charges, that extends the window significantly becuase the forgiveness application counts as a continutation. If you received forgiveness in 2021, the clock may run until 2026 or beyond.

But the statue of limitations isnt the clock that matters most. The window where early intervention can change outcomes is much shorter. Once charges are filed, options narrow dramatically. Once your indicted, your fighting for the best possible sentance rather than avoiding prosecution entirely.

Stop researching. Start acting.

The fear keeping you awake at 2am isn't really about prison. Its about your family finding out. Your kids growing up with a parent who commited fraud. The life you built was revealed as something built on a lie. We understand that fear. Its the same fear every client brings through our doors.

At Spodek Law Group, we dont judge how you got here. We focus entirely on where you go next. Call 212-300-5196 for a confidential consultation. Everything you tell us is protected by attorney-client privilege. We've handled hundreds of federal cases, and we know the difference between a situation that feels hopeless and one that actually is.

Most situatons feel worse than they are. Some are worse than they feel. But you wont know which one your in until you talk to someone who deals with these cases every day.

The penalty for lying on a PPP loan application isnt a single number you can google. Its a cascade of consequences that builds over time. But cascades can be redirected. Outcomes can change. And the single most importent variable is how quickly you act.

Stop reading. Pick up the phone.