Wisconsin PPP Loan Fraud Lawyers: When Your 2020 Relief Becomes a 2029 Indictment

The PPP program was sold as emergency relief. Apply fast, get cash, survive the pandemic. But what they didn't tell you in 2020 was that every approved loan was about to become a 10-year federal investigation target. In August 2022, Congress extended the statute of limitations for PPP fraud from 5 years to 10 years - meaning loans from 2020 can be prosecuted until 2030 or later. The SBA flagged 669,000 potentially fraudulent loans. As of 2024, only about 1,011 indictments have been completed. That leaves a backlog of roughly 668,000 cases with an entire decade to prosecute them. Your loan might have been approved in 2020, forgiven in 2021, and you could still get indicted in 2029. The relief program became a prosecution pipeline.

Spodek Law Group represents clients facing federal PPP fraud investigations across Wisconsin and nationwide. We've watched this enforcement wave build since the pandemic ended, and what were seeing is a fundamental misunderstanding about how these cases work. The program didn't end when your loan was forgiven. It started a surveillance window that doesn't close until 2030 at the earliest.

The 2022 Extension Nobody Told You About: Your 2020 Loan Can Be Prosecuted Until 2030

On August 5, 2022, Congress passed two bills extending the statute of limitations for PPP and EIDL fraud to 10 years. Before these bills, the statute was 5-6 years depending on the charge. Now its 10 years across the board.

Here's the part that catches people: The 10-year clock doesn't start from when you applied for the loan. It starts from your LAST act related to that loan. If you applied in April 2020 but submitted forgiveness documents in March 2021, the statute runs until March 2031. If you responded to an SBA audit request in 2023, it resets again. Every interaction with the SBA or your lender creates a new starting point.

The SBA Office of Inspector General identified over 669,000 potentially fraudulent loans using data analytics. As of mid-2024, federal prosecutors have completed roughly 1,011 indictments. Do the math. Thats about 0.15% of the flagged loans. Which means 99.85% of flagged loans haven't been prosecuted yet.

The Wisconsin cases we've seen follow this delayed timeline pattern. Thomas Smith from Pewaukee wasn't indicted until the investigation had been running for over a year. Eric Upchurch's case moved through the Western District in Madison with charges filed in July 2023 and sentencing in June 2024. The whole process takes 18-36 months from initial flag to indictment.

And here's the irony Congress created: They designed PPP for speed. The whole point was getting money out the door in 24-48 hours during an economic crisis. But now prosecutors are charging people for not having documentation that would of taken weeks to assemble properly - the same documentation the program explicitly waived to prioritize speed. You were told to apply fast. Now you're being prosecuted for applying too fast.

669,000 Flagged Loans, 1,011 Prosecutions: The Wave Hasn't Hit Yet

The numbers tell the story prosecutors don't want you to understand. 669,000 loans flagged as potentially fraudulent. Roughly 1,011 indictments completed. That's a 99.85% non-prosecution rate so far. But it doesn't mean the other 668,989 cases go away. It means they're still in the queue.

The SBA uses sophisticated data analytics and increasingly AI-assisted tools to identify anomalies. They cross-reference your PPP application against:

• Your 2019 tax return
• Your 2020 tax return
• Your state unemployment insurance filings
• Your bank account activity

If the numbers don't line up exactly, the algorithm flags it.

Here's what the public doesn't know: Federal investigators are legally prohibited from telling you if your under investigation. You don't get a letter. You don't get a phone call. The first notice most people get is either agents knocking on there door or there bank account getting frozen without warning. By the time you know something's wrong, the investigation has been running for months.

Your bank might know before you do. Banks file Suspicious Activity Reports (SARs) to FinCEN when they see transactions that look unusual. They're legally prohibited from telling you they filed it. You'll never know unless the FBI mentions it during an interview - and by then it's evidence in a federal case.

Nearly 40 people in Wisconsin have been charged with COVID-19 relief fraud as of January 2024. Federal prosecutors told reporters they'll continue prosecuting cases well into 2025 and beyond. The investigations are slow and methodical - which works against defendants because evidence degrades, witnesses forget details, and your ability to reconstruct what actually happened in 2020 gets harder with every passing year.

The Investigation Pattern

The investigation follows a pattern:

1. SBA flags the loan
2. SBA-OIG opens a case file and subpoenas your bank records - you don't know this is happening
3. They compare your application to your actual tax returns and find discrepancies
4. SBA-OIG refers the case to the FBI
5. FBI agents pull complete banking records for your business and personal accounts
6. They share everything with IRS Criminal Investigation

All of this happens without your knowledge.

By the time the case reaches DOJ prosecutors, they have a complete file ready for grand jury presentation. Grand juries indict 99.993% of federal cases. Your not in the room. Your attorney can't be there. Theres no cross-examination.

The statistical reality: if your loan was flagged, you haven't been prosecuted yet because they haven't gotten to you yet - not because you're safe.

Why Loan Forgiveness Made Things Worse, Not Better

Most people think getting their PPP loan forgiven was the finish line. It wasn't. It was a reset button on the statute of limitations and a new batch of documents for prosecutors to compare against your original application.

When you applied for forgiveness, you had to certify how you spent the PPP funds. Every one of those certifications is a separate potential false statement charge. If your forgiveness application says you spent $120,000 on payroll, but your bank records show you spent $80,000 on payroll and $40,000 on other expenses, that's a material misrepresentation.

The forgiveness application also resets the 10-year statute of limitations. Every subsequent document - every response to an SBA audit, every amended filing - resets it again.

The Automatic Forgiveness Trap

Here's the trap: The SBA was forgiving loans automatically for amounts under $150,000 with minimal review. Borrowers who got automatic forgiveness assumed that meant the SBA verified everything and cleared them. No. Automatic forgiveness was an administrative decision to clear the backlog - not a legal determination that your application was accurate. The SBA can forgive your loan and then refer it for criminal prosecution two years later when the data analytics flag it.

The SBA-to-DOJ pipeline works like this: An SBA audit of your forgiven loan finds discrepancies. SBA refers it to SBA-OIG. SBA-OIG doesn't just check compliance - they build a prosecution referral package. They organize the evidence in a way that makes it easy for prosecutors to indict. Then they hand it to DOJ with a recommendation to prosecute. What you thought was an audit was actually the first step of a criminal case.

Wisconsin saw this play out in the April 2025 civil settlement involving a group of affiliated companies controlled by a family office. Six companies received PPP loans totaling over $5 million, despite collectively employing more than 500 individuals. The PPP program capped eligibility at 500 employees. These companies applied anyway, got approved, and got forgiven. Then the government came back with a False Claims Act case. The settlement was $10,853,246.94 - more than double what they borrowed.

The irony is brutal. The "relief" program that saved your business in 2020 could destroy your freedom in 2027. And the forgiveness you thought meant "case closed" actually meant "evidence accepted for future prosecution."

The Multi-Agency Machine: How Your PPP Loan Gets Turned Into a Criminal Case

There are five federal agencies involved in turning your PPP loan into a criminal case, and they all share information without telling you.

The Five-Step Process

Step 1: SBA flags the loan. The algorithm compares your application against government databases. Any mismatch gets flagged.

Step 2: SBA-OIG investigates. They subpoena your bank records without notifying you. They pull your tax returns from IRS. They document every discrepancy and refer it to the FBI if they believe criminal prosecution is warranted.

Step 3: FBI pulls complete records. FBI agents subpoena complete banking records for your business and personal accounts. They're looking for how you spent the money.

Step 4: IRS-CI analyzes payroll. IRS Criminal Investigation compares your PPP application to your quarterly payroll tax deposits (Form 941). They calculate the "loss amount" which drives sentencing guidelines.

Step 5: DOJ decides to indict. All of this information gets compiled into a prosecution memo. A federal prosecutor decides whether to present the case to a grand jury.

Here's the system revelation: This multi-agency process happens in parallel, not sequential. While SBA-OIG is investigating, the FBI is already pulling bank records. By the time you find out there's an investigation, the case is 80% built. Five agencies have reviewed your application from five different angles.

And here's the bank irony: Your own bank - the one that processed your PPP loan - is often the one that triggers the investigation by filing a Suspicious Activity Report. Your bank approved the loan on Monday and reported you to federal law enforcement on Friday. And they can't tell you they did it.

The first you'll know is when FBI agents knock on your door. By then, the investigation has been running for 12-18 months and prosecutors have already decided your guilty.

Wisconsin's Longest Sentence and What It Means

Thomas Smith from Pewaukee, Wisconsin received the longest PPP fraud sentence in the state: 57 months in federal prison. He fraudulently obtained over $1.2 million through PPP applications for eight different companies, lying about payroll expenses on each one.

Smith applied for eight smaller loans using different business entities. On each application, he inflated the payroll numbers to maximize the loan amount. Once the SBA started cross-referencing applications against tax returns, the fraud became obvious. The payroll tax deposits didn't match the claimed expenses. The bank records showed money being transferred to personal accounts.

Smith got 57 months - that's 4 years and 9 months. Compare that to 2021-2022, when most defendants were getting probation or home confinement. The sentences are climbing.

The Texas Comparison

Now compare Smith's case to Texas. Michael Fullerton was sentenced to 286 months - nearly 24 years - for $3 million in fraudulent PPP loans. His wife Tiffany received 108 months. Combined: 32 years for a fraud only $1.8 million more than Smith's. Why the massive difference? Money laundering charges. The Fullertons laundered the proceeds through real estate and luxury purchases. Money laundering carries 20 years maximum per count, and it stacks.

Eric Upchurch, sentenced in Western District of Wisconsin in June 2024, received 28 months for obtaining over $400,000 and using the funds to purchase Bitcoin. The Bitcoin purchase was evidence of fraudulent intent - prosecutors argued that someone who legitimately needed PPP funds for payroll wouldn't immediately convert them to cryptocurrency.

The pattern: Sentences are escalating. Judges are making examples. Prosecutors are stacking charges to maximize sentencing exposure.

The Three Catastrophic Mistakes That Turn Investigations Into Indictments

Catastrophic Mistake #1: Talking to FBI Agents Without a Lawyer

You get a knock on the door. Two FBI agents say they want to ask a few questions about your PPP loan. They're friendly. They say their "just trying to clear some things up." You think: If I cooperate and explain everything, this will go away.

Here's what actually happens: You talk for 45 minutes. You say you "might have made some mistakes" but "didn't intend to do anything wrong." The agents nod, take notes, and leave. You feel like you cleared things up.

Three months later, you get indicted. The indictment includes the original wire fraud charges PLUS a new charge under 18 USC 1001 for making false statements to federal agents. During that conversation, you said something that contradicts your PPP application. That's a separate felony. Five years maximum per statement.

The false statement charge adds 2-4 levels to your sentencing guidelines under the obstruction enhancement. What could have been a 24-month sentence becomes 40+ months.

Here's the cascade:

• Talk to FBI without lawyer
• Make statement contradicting your application
• Charged with false statements
• Sentencing guidelines add levels for obstruction
• Lose plea deal leverage
• 2-year sentence becomes 7+ years

Defense attorneys say the same thing: If you think you can talk your way out of a federal indictment, your fooling yourself. The agents aren't there to help you. They're there to get you to incriminate yourself on tape.

Catastrophic Mistake #2: Not Acting When Your Bank Account Gets Seized

You try to access your business account and discover there's a "federal hold." You panic. You wait hoping it resolves itself. You wait weeks because you can't afford a lawyer yet. By the time you hire counsel, critical evidence is gone.

Bank account seizures are usually civil asset forfeiture actions. You have 35 days to file a claim contesting the seizure. If you miss the deadline, the seizure becomes final and the government keeps the money permanently. Even if you never get charged criminally.

The forfeiture cascade destroys your ability to fund your defense. You lose business accounts, so your business collapses. You can't pay employees. By the time you hire a lawyer, you've lost the assets you need to fund the defense.

Catastrophic Mistake #3: Destroying Documents After You Receive a Target Letter

You receive a target letter informing you that your the target of a federal grand jury investigation. You panic. You start "cleaning up" by deleting old emails or shredding documents. You think: If I get rid of the bad stuff, they can't prove the case.

Here's what happens: Prosecutors charge you with obstruction of justice under 18 USC 1512. Destruction of evidence in a federal investigation is a separate felony carrying up to 20 years. And it creates a presumption of guilt.

The cascade:

• Receive target letter
• Panic and delete emails
• Charged with obstruction (20-year max)
• Judge denies bail because "destruction of evidence shows your a flight risk"
• Sit in jail 18 months awaiting trial
• Forced to plead guilty to get out

Document destruction also triggers adverse inference instructions at trial. The judge tells the jury: "If you find that the defendant destroyed documents, you may infer that those documents would have been unfavorable." You destroyed evidence to help yourself, but you created a legal presumption that hurts you worse.

What To Do If You're Already in the System

If your already in the federal PPP fraud investigation system, the next 90 days determine whether this becomes a criminal case or something you can resolve short of indictment.

Immediate Steps You Must Take

First: Hire federal criminal defense counsel immediately. Not a business lawyer. A federal criminal defense attorney with experience in PPP prosecutions. Spodek Law Group handles PPP fraud defense cases in Wisconsin's Eastern and Western Districts. Call 212-300-5196.

Second: Do not talk to federal agents or SBA investigators without your attorney present. The cooperation paradox is real: The more you try to cooperate to clear things up, the more evidence you create against yourself. Silence looks guilty, but talking IS guilty.

Third: Preserve all documents immediately. Don't delete emails. Don't shred records. Destroying evidence after you know about an investigation is obstruction of justice, a separate 20-year felony.

Fourth: Understand that good faith is a defense argument, not a shield from indictment. "I made an honest mistake" is something you argue to a jury - not something that stops the indictment.

Fifth: Civil resolution is possible, but the window is narrow. In some cases, PPP fraud can be resolved civilly - you repay the loan plus penalties, but avoid criminal charges. This usually happens early in the investigation, before DOJ is involved. Once prosecutors and a grand jury are convened, the civil window closes.

Sixth: The honesty inversion is real. If you respond to an SBA audit by saying "I think I made a mistake on my payroll calculation," that admission can be used as evidence that you KNEW the application was false. Prosecutors argue: "He admitted he made a mistake, which proves he knew the numbers were wrong." This is why you need an attorney to coordinate any communications.

The Current Reality

The reality: PPP fraud investigations are being prosecuted more aggressively in 2024-2025 than they were in 2021-2022. Sentences are longer. Judges are imposing incarceration in almost every case. The 669,000-loan backlog means enforcement will continue through 2030 or beyond.

But early intervention can make a significant difference. Sometimes cases can be resolved civilly. Sometimes charges can be reduced. The key is acting early - before the indictment, before you talk to agents, before you destroy evidence.

If you've received any contact from federal agents, SBA-OIG, or the U.S. Attorney's Office about your PPP loan, contact Spodek Law Group at 212-300-5196. Todd Spodek and our team handle PPP fraud cases in Wisconsin and nationwide. We provide confidential consultations to assess your situation and develop a strategy to resolve the matter with the least possible damage. The investigation timeline works against you - but acting early gives you the best chance of avoiding indictment or minimizing consequences if charges have already been filed.