FEDERAL CRIMINAL LAWYERS

Aggravated Identity Theft Charges in PPP Fraud Cases

You’re looking at your indictment. Wire fraud. Bank fraud. False statements. The charges are terrifying, but you’ve read about plea deals. Cooperation. Judicial discretion. Judges who went below guidelines. There’s hope. Then you see it – 18 USC 1028A, Aggravated Identity Theft. And everything you thought you understood about your case just changed.

Welcome to Spodek Law Group. Our goal is to explain the charge that removes all hope from PPP fraud cases: aggravated identity theft under 18 USC 1028A. Every other charge in your indictment allows for judicial discretion. The judge can go below guidelines. The judge can consider your circumstances. The judge can show mercy. But when 1028A appears, a mandatory 24 months gets welded onto whatever else you receive – and the statute explicitly prohibits the judge from reducing your other sentences to compensate. Use five people’s Social Security numbers on your PPP application? That’s 10 years of mandatory consecutive time before your fraud sentence even begins.

That’s the reality that nobody explains clearly. Legal websites list identity theft as “another potential charge” without telling you it’s the charge that destroys everything else. Harold Kaeding of Minnesota learned this at trial – he received 87 months including multiple identity theft counts stacked consecutively. Jemel Lyles used his friend and employee’s identity, thinking he had “access” to the information. He got 66 months. The decision to use someone else’s identification on your application doesn’t add 2 years. It can triple your total sentence.

The 24 Months That Can’t Be Bargained Away

Heres the myth that keeps defendants making catastrophic decisions. They think identity theft is just another charge in the pile. One more count to negotiate away. One more thing the prosecutor might drop in exchange for a plea. They beleive all federal charges work the same way – guideline ranges, judicial discretion, room to maneuver.

That assumption is dangerously wrong when 1028A is involved.

The statute itself eliminates judicial discretion entirely. It says: “shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years.” Not “may be sentenced.” Not “the court shall consider.” SHALL. Mandatory. No exceptions.

But heres were it gets worse. The same statute includes this language: “the court shall not… reduce the term of imprisonment imposed for such felony to compensate for the two-year mandatory minimum.” Read that again. Even if the judge wants to give you less time on the underlying fraud to offset the identity theft, the statute forbids it. Congress removed the judges ability to show mercy completley.

Think about what this means practicaly. The judge might look at your case and think: “This person deserves 3 years total. The fraud was relativley minor. They have a family. They’ve never been in trouble before.” Under normal circumstances, that sympathetic judge could give you 36 months. But with 1028A attached, that same judge is REQUIRED to give you the fraud sentence PLUS 24 months consecutive. If the fraud guidelines call for 24 months, your getting 48 months minimum – even from a judge who thinks 36 months is apropriate.

The mandatory consecutive nature of 1028A means that every other mitigating factor in your case becomes less relevant.

How One SSN Becomes 10 Years

OK so heres how the stacking works, becuase this is were people miscalculate there exposure completley. The 24-month mandatory minimum isn’t just per case. Its per COUNT. And each count runs consecutive to the PREVIOUS count – not to the underlying fraud.

Lets walk through the math that destroyed Harold Kaeding’s life. Say you submitted a PPP application listing five fake employees. You used real Social Security numbers for each of those fake employees – maybe numbers you found somewhere, maybe former employee information. Thats five separate counts of aggravated identity theft. Each count carries its own mandatory 24 months.

The first identity theft count’s 2-year sentence runs consecutive to your fraud sentence. Then the second identity theft count runs consecutive to the first identity theft count. The third runs consecutive to the second. And so on. Five counts equals 10 years of mandatory prison time BEFORE you even add the underlying fraud charge.

According to the U.S. Sentencing Commission, 11% of defendants convicted under 1028A face multiple counts. Those defendants are looking at decade-plus sentences for what started as loan fraud. The stacking effect transforms a case that might have been 3-4 years into a case thats 12-15 years.

And theres no good behavior reduction on the mandatory portion. No judicial variance. No cooperation credit that reduces the 24 months per count. The only way to eliminate those years is to get the charges dismissed entirely – which requires either winning at trial or convincing prosecutors to drop counts during plea negotiations.

Todd Spodek has represented clients facing this exact math. When someone walks in with five identity theft counts on their indictment, were not talking about shaving a few months off there sentence. Were talking about wheather they spend most of their remaining productive years in federal prison.

Harold Kaeding: 87 Months and the Stacking Trap

Harold Kaeding of Eden Prairie, Minnesota went to trial on charges related to fraudulent PPP and EIDL applications totaling over $2.1 million. A federal jury convicted him on three counts of wire fraud, three counts of aggravated identity theft, and one count of money laundering following a ten-day trial in August 2024.

Heres what the stacking looked like in practice. Three identity theft counts means 6 years mandatory consecutive. Add the wire fraud and money laundering sentences on top of that. The judge sentenced Kaeding to 87 months – over 7 years in federal prison, plus three years of supervised release, plus full restitution.

Think about what happened at that trial. Kaeding probly thought he had defensible positions on some charges. Maybe the fraud amounts were contestable. Maybe there were evidentiary issues. But once the jury convicted on the identity theft counts, the sentancing math became brutal. Three counts times 24 months equals 6 years minimum. The wire fraud and money laundering just added more on top.

The lesson isnt that Kaeding made the wrong call going to trial. Maybe he had good reasons. The lesson is that identity theft counts create a particular kind of trial risk that dosent exist with other charges. Each count is a 2-year brick that gets added to your sentence with no judicial discretion to remove it. Fighting and losing on five identity theft counts is catastrofic in a way that fighting and losing on five wire fraud counts isnt.

At Spodek Law Group, we analyze identity theft exposure before making any recommendations about trial versus plea. The decision calculus is completley different when mandatory consecutive sentences are on the table.

Why Using “Your Own” Former Employees Still Counts

Heres the inversion that catches business owners completely off guard. They think: “I used my former employees information. I had access to that information legaly. I was there employer. How is that identity theft?”

Jemel Lyles of Maryland discovered the answer the hard way. He used the identity of his “then friend and employee” to apply for PPP loans. The loans were deposited into accounts Lyles controlled. He had access to the information. He knew the person. He might have even thought he had there permission.

The judge sentenced him to 66 months in federal prison. Because access isnt authorization. Knowing someone isnt consent. Having there SSN from legitimate prior employment dosent give you the right to use it on a fraudulent loan application.

The statute requires “without lawful authority.” Using someones identification for fraud is never lawful, regardless of how you obtained the information. The source dosent matter. What matters is that you used another persons means of identification during the commission of a felony.

This catches two categories of PPP defendants:

Business owners who listed current or former employees: Even if those people actualy worked for you at some point, using there information on a fraudulent application – especialy if you inflated payroll numbers or applied without there knowledge – constitutes identity theft. The fact that you legitimatley employed them dosent create authorization for fraud.

People who used family members information: We’ve seen cases were defendants used spouses, siblings, or parents SSNs on applications. “They would have been fine with it” isnt a legal defense. Using a family members identification without explicit authorization for a fraudulent purpose satisfies the statute.

The “I had access to that information” defense dosent work. Access obtained for legitimate purposes becomes identity theft when used for fraud.

The Flores-Figueroa Defense: When Random Numbers Save You

Heres the one genuine legal defense that sometimes works against 1028A charges. It comes from a Supreme Court case called Flores-Figueroa v. United States, and it turns on a single word: “knowingly.”

The statute criminalizes using the identification of “another person” knowingly. The Supreme Court held that prosecutors must prove you KNEW the identification belonged to an actual other person – not just that you used identification that happened to belong to someone.

What does this mean practicaly? If you randomly generated Social Security numbers for fake employees – just made up 9-digit numbers without checking wheather they corresponded to real people – you may lack the knowledge element required for conviction. You didnt KNOW those numbers belonged to actual people. You were creating fictional identities, not stealing real ones.

This defense dosent work if:

• You used information from a database of real people
• You used former employee information you knew was real
• You copied SSNs from documents that identified actual individuals
• You purchased stolen identity information

It might work if:

• You used a random number generator to create SSNs
• You made up employee names and corresponding numbers from imagination
• You can demonstrate you had no way of knowing the numbers matched real people

The Flores-Figueroa defense requires showing you lacked knowledge – which means being able to explain were the numbers came from and why you didnt know they were real. If your defense is “I thought the numbers were fake,” you need evidence supporting that belief.

This is extremley case-specific. Todd Spodek and the attorneys at Spodek Law Group evaluate every clients facts to determine wheather a knowledge defense is viable. For some clients, this defense completely eliminates identity theft exposure. For others, the facts make it impossible.

The Plea Leverage Prosecutors Don’t Want You to Understand

Now heres the system revelation that explains why identity theft charges appear on so many PPP fraud indictments even when the identity theft seems tangential. Prosecutors use 1028A as a hammer in plea negotiations.

The conversation goes like this: “We have you on wire fraud, bank fraud, and aggravated identity theft. If you go to trial and lose on everything, your looking at 8-10 years minimum – 6 of those years are mandatory identity theft consecutive time. But if you plead guilty to wire fraud and we drop the identity theft counts, were recommending 30 months.”

Thats a massive gap. The defendant facing 8-10 years if they lose at trial suddenly has an offer of 30 months. The identity theft charges created that gap. There leverage, not necessarily an accurate reflection of culpability.

This explains why prosecutors charge identity theft aggresivley in PPP cases. Every use of someone elses information – even tangential, even with apparent consent, even of former employees – becomes a potential 1028A count. Stack enough counts, and the mandatory minimums create overwhelming pressure to plead.

Heres what defendants need to understand about this dynamic:

Early cooperation has more value: If your going to plead anyway, doing it early gives prosecutors less reason to pile on additional identity theft counts. The earlier you signal cooperation, the more likely identity theft counts get dropped as part of the negotiation.

Trial creates count-stacking risk: Prosecutors sometimes add identity theft counts as cases proceed toward trial. What started as one count can become five counts as they “find” additional identities that were allegedly used. Going to trial angry can result in more charges, not fewer.

Knowledge defenses reduce leverage: If you have a legitimate Flores-Figueroa defense – genuine uncertainty about wheather the numbers belonged to real people – prosecutors have less leverage. There mandatory consecutive hammer becomes less intimidating when the defense might actualy win on those counts.

What Your Sentence Actually Looks Like With Identity Theft

Let me give you the specific numbers from U.S. Sentencing Commission data, becuase abstract discussions dont convey the reality.

In fiscal year 2024, the average sentence for individuals convicted under 18 USC 1028A was 54 months. Thats 4.5 years. Not guidelines. Not recommendations. Actual sentences imposed.

The average guideline minimum increased from 56 months in 2020 to 68 months in 2024. Sentences are getting longer, not shorter. The pandemic sympathy that existed in 2021 has been replaced by judicial frustration with the scope of PPP fraud.

Here’s the number that should terrify everyone facing identity theft charges: 99.0% of 1028A defendants were sentenced to prison. Not probation. Not home confinement. Federal prison. Basicly no one walks away from aggravated identity theft charges without serving time.

At Spodek Law Group, we map out sentancing exposure for every client during initial consultation. The math typicaly looks like this:

One identity theft count:

• Underlying fraud sentence (varies) + 24 months mandatory consecutive
• If fraud guidelines call for 24 months: Total = 48 months minimum
• 99% chance of prison time

Three identity theft counts:

• Underlying fraud sentence + 72 months mandatory consecutive
• If fraud guidelines call for 24 months: Total = 96 months minimum (8 years)
• Stacking makes trial extremley risky

Five or more counts:

• Underlying fraud sentence + 120+ months mandatory consecutive
• 10+ years before fraud sentence even begins
• Plea negotiation becomes essential

Compare this to fraud charges without identity theft, were judicial variance might produce probation or home confinement. The identity theft counts eliminate those possibilities completley.

Defense Strategy When 1028A Is on Your Indictment

After everything above, heres what actualy matters: what can you do if identity theft charges are already filed or likely coming?

Challenge the Knowledge Element: The Flores-Figueroa defense requires showing you didnt know the identification belonged to a real person. If you used randomly generated numbers, if you made up employee information without verifying it matched real people, document that NOW. Your attorney needs evidence of your state of mind when you created the application.

Early Intervention Is Essential: The window to influence what charges appear on your indictment exists during the investigation phase. Once the indictment is filed, prosecutors have already decided which identity theft counts to include. Getting experienced counsel involved before charges means potentially avoiding 1028A altogether.

Negotiate Aggressively on Count Dismissal: In plea negotiations, the dismissal of identity theft counts is often the most valuable thing you can obtain. A plea to wire fraud without identity theft is dramaticaly better than a plea that includes even one 1028A count. Experienced federal defense attorneys know how to make identity theft dismissal the center of negotiations.

Consider Cooperation Value: Information about other participants, other schemes, or systemic fraud may be valuable enough to convince prosecutors to drop identity theft counts entirely. The earlier you offer cooperation, the more valuable it is.

Dont Make It Worse: If your under investigation but not yet charged, do NOT use any more identification that isnt yours. Do NOT destroy documents showing were you obtained SSN information. Do NOT lie about wheather you knew the numbers were real. Every additional act creates additional counts and eliminates additional defenses.

Prepare for the Math: If trial is the only option, understand the stacking exposure completely. Five identity theft counts that you lose at trial means 10 years before the fraud sentence. Some cases are worth fighting. Others require accepting that the math makes trial catastrofic.

Understand the Timeline Pressure: The statute of limitations was extended to 10 years for pandemic fraud. PPP applications from 2020 can be charged until 2030. EIDL applications from 2021 can be charged until 2031. If you think your safe becuase nothing has happened in four years, your not. The investigation might be ongoing. The identity theft charges might be coming. Every month you wait without legal counsel is a month where your options narrow.

Call Spodek Law Group at 212-300-5196 before making any decisions about how to handle identity theft charges. The consultation is free. The mistake of misunderstanding your exposure is measured in years of your life.

Aggravated identity theft isnt just another charge on your indictment. Its the charge that removes judicial discretion, stacks consecutively, and transforms managable fraud cases into decade-long sentences. Understanding that reality – and building a defense strategy around it – is the only path forward.