Can You Go to Jail for PPP Loan Fraud? Federal Penalties Explained

Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek, with over 40 years of combined experience in federal criminal defense. If you’re asking whether you can go to jail for PPP loan fraud, the answer is yes – and the prison sentences are severe. Federal prosecutors are treating PPP fraud as a serious crime, and people are receiving decades of prison time for fraudulent loan applications and misuse of funds.

This article explains the federal penalties you’re facing, what determines your sentence, and what defenses can reduce or eliminate prison time.

Federal Charges and Maximum Penalties

PPP fraud cases typically involve multiple federal charges, each carrying its own maximum prison sentence. The most common charges are wire fraud, bank fraud, and making false statements to financial institutions.

Wire fraud under 18 USC 1343 applies when you used electronic communications – email, online applications, electronic bank transfers – to execute a fraud scheme. That covers submitting your PPP application online, receiving loan funds via electronic transfer, and any emails or electronic communications related to the fraud. Wire fraud carries up to 20 years in federal prison per count.

Bank fraud under 18 USC 1344 applies when you knowingly executed a scheme to defraud a financial institution or obtained money from a financial institution by false pretenses. Your PPP lender is a financial institution, and submitting a fraudulent loan application is bank fraud. Bank fraud carries up to 30 years in federal prison per count.

Making false statements to financial institutions under 18 USC 1014 applies when you knowingly made false statements in connection with a loan application. Claiming you had 15 employees when you only had 5, reporting payroll costs that were inflated, stating your business existed before it actually did – all false statements under this statute. This charge also carries up to 30 years in federal prison per count.

Conspiracy charges under 18 USC 1349 apply if you worked with anyone else on your PPP application. Your accountant, a loan application preparer, business partners, or other individuals. Conspiracy carries the same penalties as the underlying fraud offenses.

Real Sentences in 2025 PPP Fraud Cases

Actual sentences depend on federal sentencing guidelines that calculate prison time based on the amount of loss.

In July 2025, a Marietta man was convicted for a $9.6 million PPP fraud scheme. He faces up to 170 years – though actual sentences are typically much lower. A Utah businessman was sentenced to prison for defrauding the program out of over $628,000. Emanuel Tucker pleaded guilty to his role in a $15.9 million scheme.

Federal guidelines use a loss table to determine base offense levels. Fraud involving less than $6,500 results in level 6. Fraud involving $150,000 to $250,000 results in level 16. Fraud involving more than $25 million results in level 30.

A defendant with no criminal history and level 16 faces 21 to 27 months. Level 24 faces 51 to 63 months. Level 30 faces 97 to 121 months.

Enhancements That Increase Your Sentence

Sentencing guidelines include enhancements that increase prison time. If you were a leader or organizer of a fraud scheme involving five or more people, that adds 4 levels to your offense level. If you used sophisticated means to execute the fraud – creating shell companies, using false identities, submitting fake tax documents – that adds 2 levels.

If you obstructed justice by destroying documents, lying to investigators, or encouraging witnesses not to cooperate, that adds 2 levels. If your fraud involved 10 or more victims, that adds 2 levels. These enhancements stack – and they significantly increase your prison time.

Factors That Reduce Your Sentence

Federal sentencing guidelines also allow for reductions. If you accept responsibility for your conduct and plead guilty, that typically reduces your offense level by 2 or 3 points. If you cooperate with the government by providing substantial assistance in investigating or prosecuting others, prosecutors can file a motion for a downward departure that significantly reduces your sentence.

If you had a minor or minimal role in the offense – someone else organized the fraud and you participated without full knowledge of the scheme – that can reduce your offense level by 2 to 4 points.

At Spodek Law Group, we fight for every possible reduction. We present mitigation evidence showing you’re a first-time offender, you have family responsibilities, you’ve made efforts to make restitution, you have genuine remorse. We argue for alternatives to incarceration when appropriate – home detention, probation, community service for defendants who don’t pose a danger to the community.

Restitution and Financial Penalties

Prison time isn’t the only penalty. Federal judges order restitution – requiring you to repay the fraudulently obtained funds. If you received a $250,000 PPP loan based on fraud, you’ll be ordered to repay $250,000 even if you spent it.

Fines can reach $1,000,000 per count. The government can seize assets obtained with fraud proceeds – your home, cars, bank accounts, business assets.

Defenses That Avoid Prison Time

Not every PPP loan discrepancy is fraud. The government has to prove you knowingly made false statements with intent to defraud. If you made honest mistakes, if you relied on advice from accountants or loan preparers, if you had a good faith belief that your application was accurate – those are defenses that can result in acquittal.

Take the recent Supreme Court decision in Thompson v. United States regarding 18 USC 1014. The Court held that the statute doesn’t criminalize misleading yet literally true statements. If your PPP application statements were factually correct even if incomplete, you might have a defense.

We also challenge the government’s loss calculations. If prosecutors claim $500,000 in losses but you actually qualified for a $300,000 loan based on legitimate payroll, the loss is only $200,000 – which significantly reduces your sentencing exposure.

Pre-Indictment Negotiations

The best outcome is avoiding charges entirely. If we represent you before the DOJ files an indictment, we can sometimes negotiate with prosecutors to resolve the case without criminal charges. We present evidence showing mistakes rather than fraud, we arrange voluntary repayment, we demonstrate that prosecution isn’t warranted.

Even if prosecutors insist on charges, pre-indictment cooperation can result in significantly reduced charges and sentencing recommendations.

Why You Need Spodek Law Group

We defend clients in federal PPP fraud cases across the country. Todd Spodek is a second-generation criminal defense attorney who grew up working in his father’s law firm and has handled hundreds of federal cases. We represented Anna Delvey in the case that became a Netflix series. We handled the Ghislaine Maxwell juror misconduct matter.

Our team includes former federal prosecutors who understand how the DOJ builds fraud cases, what evidence they need to convict, and what weaknesses exist in their case. We’ve negotiated plea agreements that kept clients out of prison, we’ve fought charges at trial and won, and we’ve secured sentencing departures that significantly reduced prison time.

If you’re under investigation for PPP fraud, if you’ve received a target letter or grand jury subpoena, or if you’ve been charged – contact us immediately. We’re available 24/7. The decisions you make right now determine whether you go to prison and for how long. Don’t face federal prosecutors alone.