Houston PPP Loan Fraud Lawyers

Houston PPP Loan Fraud Lawyers

You took a PPP loan in 2020 or 2021. You used most of it correctly – maybe all of it. You applied for forgiveness, it got approved, and you moved on with your life. That was four years ago. You assumed if there was a problem, someone would have said something by now. That assumption is about to destroy you.

Welcome to Spodek Law Group. Our goal is to tell you exactly whats happening with PPP fraud prosecutions in Houston – not the sanitized version, not the marketing version. The Southern District of Texas is one of the most aggressive federal districts in the country, and U.S. Attorney Alamdar Hamdani has made PPP fraud a priority. If you took a PPP loan and youre worried about what might happen, this article explains what were actually seeing in Houston federal court.

Heres the reality that most Houston PPP loan applicants dont understand: the investigation into your loan has already happened. The SBA didnt just hand out $800 billion and hope everyone was honest. They built data analytics systems that cross-referenced every single application with IRS records, bank statements, wage data, and social security information. If there was a mismatch – any mismatch – your file got flagged. That flag has been sitting in a database for three years. The only question is whether the prosecutors have gotten to your file yet.

The Investigation Has Already Started

Heres what nobody tells you about PPP fraud investigations: they dont start with an FBI agent knocking on your door. They start with an algorithm. The SBA’s Office of Inspector General developed what they call “11 fraud indicators” – specific patterns that suggest an application was fraudulent. They describe these indicators as “fingerprints left behind at a crime scene.”

OK so lets talk about what those fingerprints actualy look like. Did you apply from a residential IP address for a business that claimed 50 employees? Thats a flag. Did your loan application show payroll numbers that dont match what you reported to the IRS? Thats a flag. Did you use the same EIN that someone else used in another application? Thats a flag. Did your bank account show deposits that dont match the business income you claimed? Flag.

The SBA screened more than 5 million PPP loans. They identified $200 billion in potentialy fraudulent disbursements – thats 17% of the entire program. They referred 669,000 loans for investigation. The question isnt whether they have evidence of fraud. The question is whether your loan is in that pile.

And heres what makes Houston different: the Southern District of Texas is one of the busiest federal trial courts in the entire country. More than 7,200 cases filed in 2022 alone. More than 200 prosecutors working out of the U.S. Attorneys office. They have the resources to actually prosecute these cases. Other districts might not have the bandwidth. Houston does.

By the time you receive any communication from federal authorities, they’ve already built their case. They’ve subpoenaed your bank records. They’ve obtained your tax returns from the IRS. They’ve talked to your lender. They may have interviewed people who helped you prepare the application. The investigation isnt coming – it already happened. Youre just finding out about it now.

How Houston Federal Prosecutors Build PPP Cases

The Southern District of Texas follows a methodicaly predictable pattern when building PPP fraud cases. Understanding this pattern is the difference between walking into a trap and seeing it before you step.

First, the data analytics identify suspicious applications. This happens automaticaly. Algorithms flag applications that have indicators of fraud. Your file either gets flagged or it doesnt – theres nothing you can do about this step becuase it already happened years ago.

Second, prosecutors prioritize which flagged applications to investigate. They start with the biggest dollar amounts and the most obvious fraud. But they dont stop there. Every cooperator they flip gives them information about other participants. Every guilty plea generates more leads. The net keeps expanding.

Third, they issue grand jury subpoenas. This is usualy when people first realize theyre in trouble. Your bank gets a subpoena for your records. Your accountant gets a subpoena. Someone you worked with gets called to testify. These subpoenas happen before you ever hear anything official.

Fourth, they make contact – either through a target letter or an arrest. A target letter means youre the subject of a grand jury investigation and probable charges. An arrest means theyve already indicted you. Either way, by the time they reach out, the investigation is essentialy complete.

Todd Spodek tells clients the same thing about this process: “If youre worried about a PPP loan you took in 2020 or 2021, the time to address it was a year ago. The second best time is today. Waiting until they contact you means youve lost most of your leverage.”

Heres the uncomfortable truth about Houston specifically: with 200+ prosecutors and 7,200+ cases per year, they have the capacity to actualy follow through on PPP fraud investigations. Smaller districts might let borderline cases slide. Houston prosecutes.

What SBA Data Analytics Already Knows About Your Loan

The SBA didnt just collect applications and hope people were honest. They built systems designed to catch fraud after the fact. These systems have been running for years. If your application had problems, they know.

Heres what the cross-referencing looks like in practice. Your PPP application claimed a certain number of employees and a certain average payroll. The SBA compares those numbers to what you reported on your quarterly tax filings (Form 941) and your annual returns. If the numbers dont match, you have a problem. Not a “they might ask questions” problem. A “federal fraud investigation” problem.

The IP address you used to submit your application? Logged and analyzed. If multiple fraudulent applications came from the same IP address, investigators know. If your application came from a state different than where your business operates, they noticed.

Your bank account activity? Cross-referenced against the loan proceeds and your claimed expenses. The analytics compare your deposits and withdrawals before and after the loan. If you deposited PPP funds and immediately transferred them to a personal account or spent them on things that werent covered uses, the pattern is visible.

The SBA’s fraud detection team identified specific indicators they use to flag applications. Duplicate EINs across multiple applications. Payroll numbers that dont match IRS records. Applications from newly created businesses with no operating history. Bank accounts opened right before the loan was obtained. Phone numbers or addresses shared across multiple applications.

Think about what this means. Every single PPP loan has been analyzed against these criteria. The analysis happened years ago. If your application triggered any of these flags, your file has been sitting in an investigation queue. The only variable is when – not whether – someone gets around to your case.

Houston PPP Fraud Sentencing: Real Numbers From Real Cases

Lets talk about what actualy happens when Houston PPP fraud cases go to sentencing. Not hypotheticals. Actual sentences from actual cases in the Southern District of Texas.

Amir Aqeel received a 15-year federal prison sentence for leading a $20 million PPP fraud ring. Thats 180 months. No parole in federal prison – you serve 85% of your sentence minimum. Aqeels 15 years means hes serving at least 12 years and 9 months. He wont be eligible for release until hes elderly.

Zain Khan received 48 months – four years – for $1 million in PPP fraud. Four years in federal prison for a million dollar loan. And heres what people dont understand: even after he serves that time, he faces supervised release, restitution orders, and a felony record that follows him forever.

A defendant whose name wasnt publicized received 18 months for $21,000 in PPP fraud. Read that again. Eighteen months in federal prison for a $21,000 loan. This wasnt a ring leader. This wasnt a sophisticated scheme. This was a small business owner who took a small loan and lied on the application. Eighteen months.

The sentencing data shows a clear pattern. Federal PPP fraud sentences are running aproximately 40% longer in 2024-2025 than they were in 2021-2022. Judges are less sympathetic now. The “everyone was confused during COVID” defense dosent work anymore. The novelty has worn off. Now its just fraud, and judges are sentencing accordingly.

The federal conviction rate is 93%. Once youre charged, you almost certainley get convicted. The question isnt wheather you beat the charges – almost nobody does. The question is whether you can avoid being charged in the first place, and if not, wheather you can negotiate the best possable outcome.

Heres the sentencing reality that most defendants dont understand untill its to late: federal sentences for PPP fraud are calcuated using the U.S. Sentencing Guidelines, which assign point values based on the dollar amount involved, your role in the offense, wheather you accepted responsability, and various enhancements. A $100,000 fraud can result in a guidelines range of 27-33 months. A $500,000 fraud pushes that to 41-51 months. A million dollars means 57-71 months – potentialy six years in federal prison. And these are just the starting points before enhancements get applied.

The Cooperation Trap: Why Timing Matters More Than Truth

Heres the paradox that destroys cooperating defendants: the more people who cooperate, the less valuable your cooperation becomes. The government already has most of what you could tell them. Your information is only valuable if they dont already have it.

Think about the timeline. PPP loans were distributed in 2020 and 2021. The first wave of prosecutions began in 2022. The first cooperators – the ones who came forward early and provided information the government didnt have – they got the best deals. Reduced charges. Lighter sentences. Sometimes no prison time at all.

But every cooperator provided information about other participants. Every guilty plea generated more evidence. Every successful prosecution taught prosecutors what to look for. By 2024, the government has accumulated years of cooperation agreements, thousands of pages of evidence, and detailed understanding of how PPP fraud schemes worked.

So now you want to cooperate? What can you tell them that they dont already know? Thats the question that determines the value of your cooperation. If youre offering information theyve already obtained from three other cooperators, your cooperation is worth almost nothing. If youre offering information about a bigger fish they havent caught yet, your cooperation might still have value.

Todd Spodek explains this dynamic to clients constantley: “Cooperation isnt about telling the truth. Everyones willing to tell the truth once theyre caught. Cooperation is about providing valuable information the government dosent already have. By 2025, most of that information has already been extracted from earlier cooperators.”

Heres what this means practically. Pre-indictment intervention – coming forward before youre charged – still provides leverage becuase it saves the government time and resources. But post-arrest cooperation? That window has largely closed. The government has what it needs.

Pre-Indictment Intervention: Your Narrowing Window

If you havent been contacted by federal authorities yet, you still have options. If youve already received a target letter or been arrested, those options have significantley narrowed. Understanding the difference could save you years.

Pre-indictment intervention means approaching the government before they approach you. Through an experienced federal defense attorney, you can explore whether voluntary disclosure and cooperation might resolve the matter without charges. This only works if: (1) you havent been contacted yet, (2) you have something valuable to offer, and (3) you approach it correctly.

The benefits of pre-indictment intervention include: credit for acceptance of responsibility, avoiding the most serious charges, potentially avoiding charges entirely in some cases, and demonstrating good faith that can influence sentencing if prosecution proceeds.

Pretrial diversion – where charges are deferred and eventually dismissed if you complete certain requirements – is available in some PPP cases. The criteria are strict: zero or minimal criminal history, fraud amount under $150,000, and partial restitution already paid or immediately available. If you qualify, diversion lets you avoid a conviction entirely.

But heres what most attorneys wont tell you about pre-indictment intervention: it carries risks. You might draw attention to yourself that wouldnt have otherwise materialized. You might provide information in a proffer that gets used against you if negotiations fail. You might incriminate yourself without receiving anything in return.

This is why you need an attorney who understands exactly how Houston federal prosecutors operate. Someone who has sat across the table from the U.S. Attorneys office in the Southern District of Texas. Someone who knows which prosecutors are reasonable and which arent. Someone who can evaluate whether pre-indictment intervention makes sense for your specific situation.

What Actually Happens If You’re Charged in Houston

OK so lets walk through what actualy happens if youre charged with PPP fraud in the Southern District of Texas. Not the theoretical version. The reality.

First, you get arrested or you self-surrender on a warrant. Either way, you go through processing at the U.S. Marshals office. You get fingerprinted, photographed, and held until your initial appearance before a magistrate judge.

Second, bail. In most PPP fraud cases, defendants are released on conditions – but those conditions can be restrictive. Travel limitations. Passport surrender. Financial reporting requirements. Sometimes home detention or GPS monitoring. If you have significant assets or connections outside the U.S., the government might argue youre a flight risk.

Third, discovery. The government produces the evidence against you. In PPP cases, this usualy includes your loan application, bank records, tax returns, and any communications related to the application. Reviewing this evidence is how you understand exactly what theyre alleging and what their proof looks like.

Fourth, plea negotiations or trial preparation. The 93% conviction rate tells you that most cases end in guilty pleas. Trials are rare. Acquittals are rarer. The negotiation focuses on which charges you plead to and what sentencing recommendations the parties will make.

Fifth, sentencing. Federal sentencing follows the U.S. Sentencing Guidelines, but judges have discretion to vary. Your sentence depends on the dollar amount involved, your role in the offense, your criminal history, whether you accepted responsibility, and various other factors. Sentences for PPP fraud in Houston have ranged from probation (rare) to 15+ years (for major fraud rings).

Sixth, supervised release. Even after you serve your prison sentence, youre not done. Federal sentences include a period of supervised release – essentially federal probation after prison. Violate the conditions and you go back.

Why Most “PPP Fraud Lawyers” Don’t Understand Houston Federal Court

The Southern District of Texas is one of the most distinctive federal courts in the country. Its enormous – 43 counties, 9+ million people, 7 division locations. Its busy – more than 7,200 cases per year. Its well-resourced – 200+ prosecutors. It has its own culture, its own norms, its own way of handling cases.

An attorney whos practiced exclusively in New York or California doesnt understand how Houston works. The prosecutors are different. The judges are different. The sentencing patterns are different. The negotiation dynamics are different.

At Spodek Law Group, we handle federal cases across the country – but we understand that every district has its own character. Houston isnt Manhattan. The Southern District of Texas isnt the Southern District of New York. What works in one jurisdiction might fail completely in another.

Heres what we see constantley: defendants who hired attorneys without Houston federal court experience, negotiated deals that looked reasonable on paper, and discovered at sentencing that the deal wasnt what they thought it was. Or defendants who took advice based on how things work in other districts and discovered Houston operates differently.

If youre facing potential PPP fraud charges in Houston, you need an attorney who has actualy practiced in the Southern District of Texas. Someone who knows the prosecutors by name. Someone who understands the local court culture. Someone who can accuratley predict how your case will be handled – not based on national statistics, but based on Houston-specific experiance.

The 10-year statute of limitations means the government has untill 2030 to prosecute loans taken in 2020. Untill 2031 for loans taken in 2021. Every month that passes, prosecutors work through more flagged applications. Every cooperator provides more names. The investigation pipeline keeps moving forward, and eventualy it reaches your file.

Most defendants wait to act untill theyve recieved a target letter or been arrested. By then, most options have dissappeared. The time for pre-indictment intervention has passed. The cooperation window has closed. All thats left is damage control – negotiating the best plea deal possable and minimizing the sentence.

The investigation has already happened. Your loan has already been analyzed. The only question is what you do now – before they reach out to you, or after. Call Spodek Law Group at 212-300-5196. The consultation is free. The cost of waiting isnt.