The Paycheck Protection Program (PPP) was created by the U.S. government in response to the economic impact of the COVID-19 pandemic. The program provides small businesses with forgivable loans to help them keep their employees on payroll and pay other essential expenses. The PPP was a critical part of the federal response to the pandemic, but it has also been subject to widespread fraud.

Is the Government Still Investigating PPP Loan Fraud?

Yes, the investigation into PPP loan fraud is ongoing. The U.S. Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), and other law enforcement agencies have made it a priority to investigate and prosecute individuals and companies that committed PPP fraud. To date, the DOJ has charged more than 200 individuals with PPP fraud, and the FBI has opened hundreds of investigations into potential fraud.

Who Investigates PPP Loan Fraud?

The investigation into PPP loan fraud is being led by several federal agencies, including the DOJ, the FBI, and the Small Business Administration’s Office of Inspector General. These agencies work together to identify and investigate individuals and companies suspected of defrauding the PPP program. They also coordinate with state and local law enforcement agencies to bring charges against those suspected of fraud.

How Were People Scamming PPP Loans?

There were several ways that people and companies committed fraud under the PPP. Some of the most common methods include:

• False Information: Some individuals and companies provided false information on their PPP loan applications such as overstating the number of employees they had or inflating their payroll expenses.
• Misuse of Funds: Some individuals and companies used PPP funds for unauthorized purposes such as personal expenses or investments in unrelated businesses.
• Phantom Companies: Some individuals created fake companies to apply for PPP loans and then used the funds for personal gain.
• Insider Fraud: Some insiders, such as bank employees or accountants, used their knowledge of the PPP process to submit fraudulent loan applications or misdirect funds.

What are the Consequences of PPP Loan Fraud?

The consequences of PPP loan fraud can be severe. Individuals and companies that committed fraud under the PPP face both criminal and civil penalties, including:

• Criminal Penalties: Individuals who committed PPP fraud can be charged with federal crimes, such as wire fraud or bank fraud. These crimes carry substantial prison sentences and fines.
• Civil Penalties: The U.S. government can seek civil damages from individuals and companies that committed PPP fraud, including the repayment of the loan plus interest.
• Reputational Damage: Individuals and companies that committed PPP fraud face significant reputational damage, which can have a long-lasting impact on their businesses and careers.
• Disqualification from Future Programs: Individuals and companies that committed PPP fraud may be disqualified from participating in future federal programs, such as disaster relief programs or small business loans.

The PPP was a critical part of the federal response to the COVID-19 pandemic, but it has also been subject to widespread fraud against the U.S. Government. The U.S. government has made it a priority to investigate and prosecute individuals and companies that committed fraud under the PPP.

If you are under investigation or have a need to speak with a federal criminal defense attorney experienced in complex fraud cases, contact our law office to speak with our attorneys about your situation.  It is possible that you have a defense to what the government is accusing you of.  For example, perhaps the inaccuracies in your PPP application were inadvertent.  Or perhaps the unauthorized expenditures the government is accusing you have having made actually involved regular (non PPP) business proceeds.   Our attorneys (with assistance of accounting experts, where appropriate) can help explore whether these or other defenses are available to you.

DOJ Sends Clear Message on PPP Fraud

A man from Virginia has been convicted for committing multimillion-dollar fraud in the COVID-19 relief programs. The U.S. Department of Justice (DOJ) announced that the man was convicted of multiple counts of wire fraud and bank fraud in connection with his fraud scheme that involved the misuse of COVID-19 relief funds, including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program.

The man applied for multiple PPP and EIDL loans in the names of several companies he controlled, falsely representing the number of employees and the amount of payroll expenses of the companies. He then used the fraudulently obtained funds for personal expenses, such as luxury cars, jewelry, and real estate.

The investigation into the man’s fraud scheme was conducted by the FBI and the Small Business Administration’s Office of Inspector General, with the assistance of the U.S. Attorney’s Office for the Eastern District of Virginia. The man was charged and convicted after a jury trial, and he now faces a maximum sentence of 20 years in prison for each count of wire fraud and 30 years in prison for each count of bank fraud.

The DOJ emphasized that the conviction serves as a warning to others who may have committed fraud in COVID-19 relief programs. The U.S. government has made it a priority to investigate and prosecute individuals and companies suspected of committing fraud in these programs, and the consequences of COVID-19 relief fraud can be severe, including criminal and civil penalties, reputational damage, and disqualification from future programs.

The U.S. government continues to investigate and prosecute individuals and companies suspected of committing fraud in COVID-19 relief programs, and the consequences of such fraud can be severe.

If you are under investigation or have a need to speak with a federal criminal defense law firm experienced in federal fraud cases, please contact our law office immediately.