Alabama PPP Loan Fraud Lawyers

Alabama PPP Loan Fraud Lawyers

FBI agents appeared at your Birmingham office. Or SBA investigators sent a letter demanding records for your 2020 PPP loan—the one you applied for when Alabama’s lockdown shut your business down and you needed payroll money to survive. You filled out forms based on SBA guidance that changed weekly, got approved, kept employees paid. Now federal prosecutors in Alabama’s Northern or Middle District say you committed fraud. You’re reading about Tuscaloosa defendants sentenced to 36 months in federal prison for PPP fraud. You’re wondering if your pandemic survival loan becomes a federal felony in Alabama federal court.

Thanks for visiting Spodek Law Group—a second-generation law firm managed by Todd Spodek. We have over 40 years of combined experience defending federal fraud cases, including PPP prosecutions in Alabama federal courts. This article tells you what happens from Alabama investigation through sentencing in Birmingham or Montgomery federal court—including recent Tuscaloosa convictions and July 2025 Auburn indictments. When Alabama federal prosecutors use 30-year maximum sentences to coerce guilty pleas, your Sixth Amendment right to counsel isn’t optional.

They’re Still Prosecuting PPP Cases in Alabama in 2025

The Paycheck Protection Program ended in 2021. So why are federal prosecutors in Alabama’s Northern and Middle Districts still filing charges in 2025? In April 2024, two Tuscaloosa men were sentenced by U.S. Attorney Prim F. Escalona’s office for PPP fraud—Kenzarian Lemark Harris received 36 months in federal prison plus full restitution. In July 2025, a federal grand jury in Alabama’s Middle District indicted Cesar Campos-Reyes, 52, from Auburn on four counts of bank fraud, four counts of wire fraud, and one count of money laundering. In June 2025, a federal jury convicted Stephanie Hockridge, founder of lender service provider Blueacorn, for processing “tens of millions of dollars in fraudulent PPP loans”—she faces up to 20 years when sentenced in October. These aren’t old cases finally reaching resolution; these are new Alabama federal prosecutions for conduct from 2020.

Congress extended the statute of limitations for PPP fraud from five to ten years in 2022. Alabama federal prosecutors can charge you through 2031 for a 2020 loan. The government distributed over $800 billion with minimal oversight, then prosecuted borrowers when chaos produced questionable applications. When Alabama federal prosecutors target business owners who struggled to interpret contradictory SBA guidance during a pandemic, constitutional protections become the only barrier between aggressive prosecution and wrongful conviction.

Investigation to Sentencing

Your first indication of trouble: an SBA auditor sends a letter requesting documentation for your 2020 PPP loan. Payroll records, tax returns, bank statements. Or FBI agents appear at your Alabama business asking to “talk” about your loan application. What you do next determines whether you face charges in Birmingham or Montgomery federal court—and if charged, whether you receive probation or prison time like those Tuscaloosa defendants. SBA audits flag inconsistencies. FBI opens an investigation, subpoenas documents from your bank and accountant, interviews employees. This lasts months, sometimes over a year. You might not know you’re under investigation until agents contact you or you receive a target letter from an Assistant U.S. Attorney in Alabama’s Northern or Middle District. This is when counsel matters most—before you talk to Alabama investigators, before you turn over documents, before irreversible decisions. A federal grand jury in Birmingham, Montgomery, Mobile, or Huntsville charges you with 18 U.S.C. § 1344 (bank fraud), 18 U.S.C. § 1014 (false statements to SBA), 18 U.S.C. § 1021 (conspiracy)—30 years, 30 years, 5 years maximum respectively. You’re arrested or surrender at an Alabama federal courthouse. Initial appearance and detention hearing. Most nonviolent fraud defendants in Alabama are released pending trial. Your Alabama attorney gets discovery. You file motions to suppress evidence, motions to dismiss counts. Plea negotiations begin with the AUSA. Here’s reality: 90% of federal cases resolve through guilty pleas. Not because everyone’s guilty—because of the trial penalty. Alabama prosecutors offer three years if you plead; threaten ten if you go to trial and lose. That coercive power is why your right to trial exists more in theory than practice. You either accept a plea or proceed to trial in Alabama federal court. Sentencing occurs three to six months later. The judge calculates your guideline range based on federal sentencing guidelines—primarily loss amount. Alabama prosecutors argue for prison time. Your attorney argues mitigating factors: repayment, acceptance of responsibility, criminal history, good faith reliance on advice.

Intent

The government must prove you intentionally misrepresented facts on your PPP loan application. Not that you made errors—that you knowingly submitted false information to obtain funds you weren’t entitled to receive. This intent requirement creates the primary defense in Alabama PPP fraud cases: good faith mistake. Consider early 2020’s confusion. The CARES Act left eligibility questions unanswered. The SBA issued FAQs, then revised them repeatedly. How do you calculate “payroll costs” for independent contractors? Can you include owner compensation? These were many, many questions that separated eligibility from fraud charges in Alabama federal court. Suppose you relied on your Alabama accountant to calculate payroll. Your accountant used a methodology including compensation categories the SBA later clarified were ineligible. Years later, Northern or Middle District prosecutors claim fraud. This is where the intent defense works: you didn’t knowingly submit false information; you relied in good faith on professional advice. That’s not a crime—that’s a paperwork error. Or the SBA guidance was unclear about eligibility. You interpreted it to allow your application. Alabama prosecutors say you were wrong. But criminal fraud requires proof you knew your application was false. If reasonable people disagreed about SBA guidance—and in early 2020, they did—prosecutors can’t prove intentional fraud. Alabama federal prosecutors charge you with 30-year maximum bank fraud, then offer five years to plead. That coercive dynamic forces innocent people to accept convictions. The constitutional principle: punishment should fit the crime in Birmingham or Montgomery federal court, not prosecutor discretion. When the line between paperwork error and federal felony depends on interpreting ambiguous pandemic guidance, presumption of innocence separates legitimate prosecution from overreach. The Tuscaloosa defendant who got 36 months in Alabama’s Northern District? Kenzarian Lemark Harris obtained fraudulent PPP loans and pleaded guilty to wire fraud. At the other end: defendants nationwide who obtained small loans based on good faith errors and repaid before sentencing sometimes receive probation. Sentencing in Alabama federal court depends on loss amount—guidelines increase dramatically as loss increases. Acceptance of responsibility: pleading guilty brings a three-level reduction, often the difference between prison and probation in Birmingham or Montgomery. Restitution before sentencing demonstrates remorse. First-time offenders receive lower sentences than those with priors. Cooperation investigating other cases brings significant reductions. Recent sentences nationwide: $11 million with money laundering got 15+ years. $900,000 scheme got 51 months. Smaller amounts with mitigating factors in Alabama federal court: supervised release or short terms possible. When FBI agents searched your Birmingham or Montgomery office, did they have a warrant? If they searched without a warrant or exceeded its scope, evidence gets suppressed under the Fourth Amendment. Sometimes suppressing key evidence collapses the government’s case in Alabama federal court. When agents interviewed you in Alabama, did they advise you of Miranda rights before custodial interrogation? Did they continue questioning after you invoked your right to remain silent? Statements obtained in violation of the Fifth Amendment get suppressed. If your confession was the prosecution’s centerpiece and gets suppressed in Birmingham or Montgomery, the case might collapse. Did Alabama prosecutors rely on evidence from an administrative subpoena that exceeded authority? Did investigators coerce your Alabama accountant into providing privileged documents? These aren’t technicalities—these are constitutional protections that exist because government power can be abused. The “insufficient evidence” defense challenges government burden. Alabama prosecutors must prove every element beyond reasonable doubt. If evidence shows errors but doesn’t prove intentional fraud in Birmingham or Montgomery federal court—if your SBA interpretation was objectively reasonable even if wrong—government hasn’t met its burden.

212-300-5196.