FEDERAL CRIMINAL LAWYERS

First-Time PPP Fraud Offender: Sentencing and What to Expect

You keep telling yourself the same thing. You’ve never been in trouble before. No arrests. No convictions. Not even a speeding ticket in years. Surely that counts for something. Surely the judge will see that this was one mistake – one bad decision during the chaos of a pandemic – and give you probation. That’s what happens to first-time offenders, right? Wrong. That expectation is about to cost you years of your life.

Welcome to Spodek Law Group. Our goal is to explain something that almost no one understands until it’s too late: “first-time offender” status in federal PPP fraud cases means almost nothing. It doesn’t get you probation. It doesn’t get you leniency. It’s not a bonus that reduces your sentence. It’s the baseline – the starting point that the sentencing guidelines already assume. Almost every PPP fraud defendant is a first-time offender. And almost every one of them went to prison anyway.

That’s the reality that destroys people’s expectations. They walk into federal court thinking their clean record will save them. They assume the judge will look at their life – decades without legal trouble – and reward that with mercy. But the federal sentencing system doesn’t work that way. Your clean record prevents you from getting additional punishment. It doesn’t reduce the punishment you were already facing. The math is brutal, and the math doesn’t care about your expectations.

The First-Time Offender Myth

Heres the inversion that nobody explains until its to late. In state court, first-time offenders often do get probation. Judges have wide discretion. A sympathetic defendant with no criminal history might walk out of court with community service and a fine. People know this from TV, from friends, from cultural assumptions about how courts work.

Federal court is different. Completley different. The federal sentencing guidelines create a structured system were judges follow a grid. That grid has two axes. The vertical axis is your offense level – determined primarily by how much money was involved in the fraud. The horizontal axis is your criminal history category – which ranges from Category I (no criminal history) to Category VI (extensive criminal history).

Heres the part that breaks peoples hearts. Almost every PPP fraud defendant is Category I. There not special. There not getting credit for something unusual. Category I is the default. Its were everyone without a criminal record starts. Being a first-time offender dosent move you down the grid. Your already at the bottom of that axis. The only direction you can go is up – toward harsher sentences if you had prior convictions.

Your clean record doesn’t reduce your sentence. It prevents you from getting more time. That’s a completely different thing.

Think about what that means. When you imagine the judge considering your spotless record, your imagining something that simply dosent happen. The judge looks at the sentencing grid. They find your offense level based on the loss amount. They find your criminal history category – which is I, because you have no record. They identify the cell where those two factors intersect. That cell contains a sentencing range in months. And that range is what the judge starts with – not some higher number that your clean record reduces.

How the Federal Sentencing Grid Actually Works

Todd Spodek explains this calculation to every client who walks through the door expecting leniency. The federal sentencing guidelines under USSG 2B1.1 govern fraud cases. Every PPP fraud case starts with a base offense level of 6 or 7. From there, the court adds levels based on specific factors.

The most important factor – by far – is the loss amount. This is were first-time offenders get blindsided. They think there record matters most. It dosent. The loss amount matters most. The guidelines have a detailed schedule that adds levels based on how much money was involved:

• $15,000 to $40,000: add 4 levels
• $40,000 to $95,000: add 6 levels
• $95,000 to $150,000: add 8 levels
• $150,000 to $250,000: add 10 levels
• $250,000 to $550,000: add 12 levels

Those level increases are massive. Each level translates to more months in prison. The difference between a $90,000 fraud and a $100,000 fraud crosses a threshold that adds 2 more levels – which could mean 4-6 additional months behind bars.

Now compare that to criminal history. Moving from Category I (no criminal record) to Category II adds maybe 2-4 months to your sentence depending on the offense level. Moving from Category I to Category III adds a bit more. But here’s the thing – your already in Category I. You cant go lower. There is no Category 0. Your clean record is already fully credited in the calculation. It dosent give you a reduction. It gives you nothing extra because you were always expected to be there.

At Spodek Law Group, weve run these calculations hundreds of times. A first-time offender with a $100,000 PPP fraud faces offense level 14-16 depending on enhancements. With Criminal History Category I, that translates to 18-27 months in federal prison. Not probation. Not a slap on the wrist. Eighteen to twenty-seven months – as a first-time offender with no criminal history whatsoever.

The clients who expected probation are devastated when they see this math. They thought there record would save them. It didnt. The record was already factored in. The loss amount drove the sentence. And the loss amount dosent care that you’ve never been arrested before.

The Loss Amount That Matters More Than Your Clean Record

Lets make this concrete with an example that ilustrates the disparity. Imagine two defendants. Defendant A has a minor criminal record from twenty years ago – a misdemeanor theft conviction from when they were 22. Defendant B has never been arrested for anything in their entire life.

Both committed identical $150,000 PPP frauds. Both plead guilty. Both express remorse. Both have supportive families and community ties.

Defendant A, with the old misdemeanor, might be Criminal History Category II instead of Category I. For offense level 17, that means a guideline range of 27-33 months instead of 24-30 months. The difference? About 3 months.

Now imagine a different comparison. Defendant C has no criminal history – Category I, just like the spotless Defendant B. But Defendant C committed a $250,000 fraud instead of $150,000. That pushes the offense level from 17 to 19 or higher. The guideline range jumps from 24-30 months to 30-37 months. The difference? About 7 months – more than double the impact of criminal history.

That’s the hidden connection nobody explains. Loss amount moves your sentence far more than criminal history. A bigger fraud by a first-time offender gets punished more severely than a smaller fraud by someone with a record. The system is designed this way. It prioritizes the harm caused over the defendant’s background.

This is why pinning your hopes on “first-time offender” status is so dangerous. Your focusing on the factor that matters least. The loss amount – the factor that matters most – is driving your sentence in ways your not even paying attention to.

And its not just the money you recieved. The guidelines use “intended loss” – which can be much higher. If you submitted three PPP applications for $50,000 each but only one was approved and funded, prosecutors will argue your intended loss was $150,000, not $50,000. Denied applications count against you. Failed attempts count against you. The government calculates what you tried to steal, not just what you succeeded in stealing.

This intended-loss calculation blindsides first-time offenders who assume there exposure is limited to what actualy hit there bank account. It isnt. Every application you submitted – even the ones that got rejected, even the ones you withdrew – potentially contributes to your loss calculation. Multiple applications through different lenders? All of them aggregate together. A second-draw loan after your first-draw? Combined together. The number that matters is rarely the number you think it is.

Why 2025 Sentences Are 40% Longer Than 2021

Defendants sentenced in 2024-2025 recieve prison terms 40% longer on average then defendants sentenced in 2021-2022 for identical conduct.

Read that again. Same crime. Same amount. Same clean record. Forty percent more prison time. The difference isnt the defendant. Its the year.

Early in the pandemic, some federal judges showed leniancy. These were extraordinary times. The government was handing out money chaotically. The rules were confusing. People made mistakes. Some judges sympathized with defendants who made bad decisions during an unprecidented crisis.

Those days are over.

At Spodek Law Group, weve watched this shift happen in real time. In 2021, a first-time offender with a $50,000 fraud might have gotten probation with home confinement. In 2025, that same defendant gets 12-18 months in federal prison. The guidelines havnt changed. The judicial attitude has.

Consider the numbers. Out of hundreds of PPP fraud defendants sentenced, only two recieved probation only – no prison time at all. Two. Everyone else went to prison. That includes first-time offenders. That includes people with compelling personal circumstances. That includes parents, veterans, and people who genuinly thought they qualified for the loans.

Kelton McClarrin of Cincinnati is a typical example. He recieved nearly $21,000 from a fraudulent PPP loan. He used the money for DoorDash, Grubhub, hotels, and jail commissary. He was a first-time offender. He got 18 months in federal prison. Not probation. Not home confinement. Eighteen months in a federal facility.

The pattern is clear. Federal judges in 2025 include prison time in nearly every PPP and EIDL fraud sentencing – regardless of the amount involved. The era of pandemic-related leniency is finished. If your expecting the judge to cut you a break because its your first offense, your operating on outdated assumptions that havent been true for years.

Several factors drove this shift. First, the sheer volume of PPP fraud cases overwhelmed judges with the same schemes repeated hundreds of times – fake employees, inflated payroll, shell companies. There patience wore thin. Second, public anger about pandemic fraud reached judges through media coverage and political pressure. Third, the Department of Justice made pandemic fraud a top priority and pushed for harsh sentences. Prosecutors are requesting above-guideline sentences more often, and judges are granting those requests.

Theres another reality first-time offenders dont understand until they reach sentancing: theres no parole in the federal system. When the judge says 24 months, you serve at least 85% of that sentence – roughly 20 months minimum. The only credits available are good time credits that reduce your sentence by about 54 days per year if you maintain perfect behavior. Unlike state systems where parole boards can release you early, federal prison time is nearly all served time.

This devastates first-time offenders who assume the system has built-in escape hatches. They think parole will cut there sentence in half. It wont – because parole dosent exist. They think good behavior will get them out in a few months. It wont – because good time credits are limited. The 24-month sentence the judge imposes translates to roughly 20 months behind bars. Plan accordingly.

What Actually Reduces Your Sentence

If first-time offender status dosent help much, what does? This is were defense strategy becomes critical. The factors that actualy move the needle are things you might not be focused on.

Acceptance of responsibility (-3 levels): If you plead guilty and genuinly accept responsibility for your conduct, the guidelines provide a 3-level reduction. This is huge. Three levels might mean 6-12 fewer months in prison. But it requires more then just pleading guilty. You have to demonstrate genuine acceptance – not just strategic calculation. Judges can tell the difference.

Substantial assistance to the government (5K1.1 motion): If you cooperate with prosecutors to help them prosecute others, the government can file a motion allowing the judge to sentence you below the guideline range. This is one of the few ways to get truly significant reductions. But cooperation has to be real and substantial. Naming names that prosecutors already know dosent count.

Voluntary disclosure and restitution: Coming forward before charges are filed, returning the money, and demonstrating that the fraud was a genuine mistake rather then calculated theft – these factors influence prosecutorial decisions. They can affect whether charges are filed at all, which charges are brought, and what sentence prosecutors recommend.

Compelling personal circumstances: While the guidelines limit judicial discretion, judges can still vary downward based on extraordinary circumstances. Serious medical conditions, being the sole caretaker of young children, military service, community involvement – these factors can matter. But they have to be genuinely exceptional. Everyone claims to be a good person. The bar for a variance is high.

Challenging the loss calculation: If prosecutors are claiming a loss amount thats inflated or includes applications that were denied, challenging that calculation can move you into a lower sentencing bracket. The difference between $145,000 and $155,000 loss could mean 2 fewer levels and 6 fewer months.

Todd Spodek tells clients the same thing every time: stop focusing on your clean record and start focusing on the factors that actualy reduce sentences. Your first-time offender status is already baked into the calculation. It’s not going to save you. Building acceptance of responsibility, gathering mitigation evidence, and understanding the loss amount calculation – those are the things that move numbers.

Building Your Defense as a First-Time Offender

By now you understand why “first-time offender” isnt the advantage you thought it was. The question becomes: what do you do about it?

Start before charges are filed. The worst time to get a federal defense lawyer is after your indicted. The second-worst time is after you recieve a target letter. The best time is now – before any of that happens – when theres still room to influence how the investigation unfolds. Early intervention can affect which charges are brought, how the loss amount is calculated, and wether cooperation credit is available.

Document everything that could reduce your offense level. Did you use any of the PPP money for legitimate purposes? Document it. Did you return money voluntarily? Document it. Did you rely on advice from an accountant or loan preparer who assured you the application was correct? Document it. These factors wont necessarily get you acquitted, but they can affect sentancing.

Build mitigation evidence now. Character letters from employers, community members, and family. Evidence of charitable work and community involvement. Medical records if health issues are relevant. Employment history showing years of productive work. This evidence matters at sentancing – but only if you start gathering it early.

Understand the plea bargaining reality. Most federal cases end in guilty pleas. The question is what terms you can negotiate. Charge bargaining – getting prosecutors to drop some counts in exchange for a plea to others – is standard practice. Understanding which charges carry mandatory minimums and which dont is essential.

Dont talk without a lawyer. Every word you say to investigators after recieving a target letter becomes additional evidence. You cant talk your way out of a completed investigation. You can only talk yourself deeper into it. The 40% longer sentences in 2025 include plenty of defendants who thought they could explain themselves to federal agents.

Prepare for supervised release. Even after you serve your prison sentence, you face 2-5 years of supervised release – federal probation. Violations can send you back to prison. Restitution obligations follow you for life. The sentence the judge imposes isnt the end of your legal obligations. Its the begining of a years-long process of supervision, payment, and restriction.

Consider the collateral consequences. A federal fraud conviction affects more then your freedom. Professional licenses can be revoked. Voting rights may be lost depending on your state. Immigration consequences can be severe for non-citizens. Banking relationships may be terminated. Future employment becomes dramatically harder. The “first-time offender” label dosent protect you from any of these consequences – a conviction is a conviction regardless of your prior record.

Spodek Law Group has handled hundreds of federal fraud cases. We understand how the sentencing guidelines work in practice, not just in theory. We’ve seen first-time offenders who expected probation get three-year sentences. We’ve also seen first-time offenders build genuine mitigation cases that resulted in below-guideline sentences. The difference isnt there criminal history – its there defense strategy.

Call us at 212-300-5196 before you talk to anyone else. The consultation is free. The mistake of waiting isnt.

Your first-time offender status wont save you. The federal sentencing system already assumes your a first-time offender. It assumes you have no criminal history. It starts from that baseline and calculates your sentence based on the loss amount, the enhancements, and the specific factors of your case. If you want a better outcome then the guidelines suggest, you need something more then a clean record. You need a defense strategy that addresses the factors judges actually consider – and you need it before the sentencing hearing, not during it.

Sources:

• USSC Federal Sentencing Guidelines
• USSC 5K1.1 Primer – Substantial Assistance
• DOJ COVID-19 Fraud Enforcement
• 18 U.S.C. § 1343 – Wire Fraud