Kentucky PPP – SBA – EIDL Loan Fraud Lawyers

Kentucky PPP – SBA – EIDL Loan Fraud Lawyers

The Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program were created by the federal government in 2020 to provide emergency financial assistance to small businesses impacted by the COVID-19 pandemic. While these programs have helped many legitimate small businesses stay afloat, there have also been issues with fraud and abuse. This article will provide an overview of PPP and EIDL loan fraud issues in Kentucky, the applicable federal laws, potential charges and penalties, and how an experienced defense lawyer can help.

Overview of PPP and EIDL Loan Programs

The Coronavirus Aid, Relief, and Economic Security (CARES) Act established the PPP to provide small businesses with loans to cover payroll, rent, utilities and other expenses. These loans can be fully forgiven if the business uses at least 60% of the funds on payroll expenses. The CARES Act also expanded the SBA’s existing EIDL program, which provides low-interest loans to businesses affected by disasters.

To receive a PPP or EIDL loan quickly, the application process required limited upfront verification. Applicants only needed to certify that they met the eligibility criteria. This lack of safeguards left the programs vulnerable to fraud and abuse.

PPP and EIDL Loan Fraud Issues in Kentucky

Federal prosecutors have brought several PPP and EIDL fraud cases in Kentucky. In July 2022, Andrew Prell of Louisville was indicted for allegedly obtaining a $133,000 EIDL loan using false information. He claimed the funds would support a business that was not operating at the time.

Other Kentucky PPP and EIDL fraud cases have involved:

• Falsifying the number of employees and payroll expenses to obtain larger PPP loans.
• Using PPP funds for personal purchases instead of eligible business expenses.
• Applying for multiple PPP loans for non-existent businesses using fake employee and payroll data.
• Using stolen identities to apply for fraudulent EIDL loans.

The U.S. Attorney’s Office in Kentucky has warned that those who misuse PPP and EIDL funds may face criminal prosecution and encouraged reporting suspected fraud.

Federal Laws Related to PPP and EIDL Loan Fraud

Several federal criminal statutes may apply in PPP and EIDL fraud cases:

• Wire Fraud (18 U.S.C. § 1343): This broadly applicable law covers any scheme to defraud others of money or property using interstate wires, like the internet or telephone. Submitting an online PPP or EIDL application with false information could qualify as wire fraud.
• Bank Fraud (18 U.S.C. § 1344): This statute prohibits schemes to obtain money from financial institutions, like federally insured banks, by false statements or representations. Lying on a PPP loan application to a bank could lead to bank fraud charges.
• False Statements (18 U.S.C. § 1001): Making materially false statements in any matter within federal agency jurisdiction is illegal. False statements in PPP or EIDL applications to the SBA violate this law.
• Aggravated Identity Theft (18 U.S.C. § 1028A): Stealing and using someone else’s personal information, like their Social Security number, to commit fraud can lead to an aggravated identity theft charge.
• Money Laundering (18 U.S.C. § 1956): Disguising the source of illegally obtained funds, like through PPP or EIDL fraud, by transferring through accounts can constitute money laundering.

In addition to criminal laws, those who commit fraud in obtaining or using PPP and EIDL loans may face civil liability under the False Claims Act (31 U.S.C. §§ 3729–3733).

Potential Charges and Penalties

The potential charges and penalties for PPP or EIDL loan fraud depend on the specific offenses and amounts involved. Some examples of potential penalties include:

• Wire fraud and bank fraud over $1 million may lead to up to 30 years imprisonment and a $1 million fine.
• False statements can result in up to 5 years imprisonment.
• Aggravated identity theft has a mandatory 2-year minimum prison sentence.
• Violations of the False Claims Act can lead to treble damages plus civil penalties up to $23,331 per false claim.

Prosecutors often pursue multiple charges with consecutive sentences, resulting in lengthy prison terms in serious PPP and EIDL fraud cases.

How a Defense Lawyer Can Help

Those facing PPP or EIDL fraud investigations and charges should retain an experienced federal criminal defense lawyer immediately. An attorney can help by:

• Conducting an independent investigation of the allegations.
• Negotiating with prosecutors to minimize charges or agree to a plea deal.
• Challenging improper searches and seizures or other constitutional violations.
• Asserting defenses based on lack of criminal intent or misunderstandings.
• Advocating for the lowest possible sentence if convicted.

Having skilled legal counsel is essential to navigate federal loan fraud allegations and build the strongest possible defense. An attorney may even be able to get charges dismissed or avoid criminal prosecution altogether.

Conclusion

While PPP and EIDL loans provided vital support for struggling businesses during COVID-19, these programs were also targeted by fraudsters in Kentucky and nationwide. Federal prosecutors are aggressively pursuing cases against those who obtain these loans through deception and misuse the funds illegally. Anyone accused of PPP or EIDL loan fraud should immediately consult an attorney to protect their rights and develop an effective defense strategy. With an experienced lawyer’s help, some charges may be avoided, minimized or defeated at trial.