Charged With Using Someone Else's Identity for EIDL Loan.

Yes, using someone else’s personal information on an EIDL application or any other pandemic-era government benefit application can support allegations of aggravated identity theft under 18 U.S.C. § 1028A.

Section 1028A addresses the offense of aggravated identity theft, and the statutory provisions of Section 1028A impose a mandatory consecutive two-year sentence for aggravated identity theft in addition to all other charges. While there are statutory provisions, exceptions, and mitigation strategies available in certain circumstances, the potential for added prison time makes these accusations particularly serious.

However, using another person’s personal information on an EIDL application (or any other loan application) does not necessarily mean that person committed identity theft. In order to prove identity theft, the government must establish that the person knowingly used someone else’s identity. In some cases, it may be possible to argue that this use was based on a good-faith misunderstanding.

Good-faith misunderstandings can undermine the knowledge and intent required to establish liability in many federal fraud cases, including cases involving identity theft. Again, this depends on the specific facts involved and on a detailed analysis of the applicable statutes, regulations, and case law.

Ultimately, an arrest or federal investigation does not establish criminal guilt or a criminal conviction. To prove identity theft or any other charges beyond a reasonable doubt, federal law enforcement must have sufficient evidence to support a guilty verdict at trial. In light of this, defendants facing charges of identity theft or pandemic-era loan fraud deserve to fully defend themselves with the help of experienced defense counsel. Our defense attorneys use their knowledge, skills, and experience to help clients who have been arrested or are under investigation for these crimes.

How Does an EIDL Identity Allegation Differ from False Statements, Loan Stacking, or Other EIDL Fraud?

Identity theft, or aggravated identity theft in the case of the most serious allegations, involves using someone else’s identifying information (name, address, Social Security number, etc.) to commit a crime. In some cases, this may include using a person’s information to obtain an EIDL loan, and in some cases, this may be what triggered an EIDL fraud investigation. “EIDL fraud,” however, is a broader term that encompasses any and all forms of criminal activity, including using a fictitious business, an inactive business, or a defunct business to unlawfully obtain an EIDL loan. In addition to these forms of EIDL fraud, this term also refers to inflating an EIDL application’s gross receipts to produce a larger approved loan. “Loan stacking” is a form of EIDL fraud that refers to the practice of applying for multiple loans and accepting funds that overlap. In other words, loan stacking involves accepting funding for the same expenses. These are all forms of EIDL fraud, but they are distinct from making false statements, which is also prohibited under federal law. A false-statement charge under 18 U.S.C. 1001 can apply to anyone who makes false statements in connection with applying for and receiving federal loan proceeds. But this can apply without the use of another person’s identity, without inflating gross receipts, and without loan stacking.

When defending against EIDL fraud allegations, it is essential to first identify the charges involved. The government may seek to prove a violation of several different federal statutes, with the possibility of charges such as aggravated identity theft, bank fraud, wire fraud, and a violation of the false statements statute. We understand how to address these serious allegations effectively.

What Evidence Can Tie Your Name or Account to Another Person’s Identity in an EIDL Case?

Federal investigations into identity theft allegations in EIDL cases often involve multiple agencies, including the FBI, U.S. Department of Justice (DOJ), U.S. Small Business Administration’s Office of Inspector General (SBA-OIG), and the Internal Revenue Service Criminal Investigation division (IRS-CI). To establish that you knowingly used another person’s identity to obtain loan funds illegally, investigators may look at information such as:

• Loan applications, applications to apply, and supporting financial documentation
• Bank records, credit card statements, and wire transfer records
• Emails, text messages, call logs, and social media communications
• Other sources of information as applicable

As a result, if you are worried about a federal investigation, you may have recently received a subpoena or been interviewed by an FBI agent, a state or federal auditor, or the SBA-OIG. This may be your first sign that you are targeted in an investigation targeting identity theft or other types of fraudulent claims under the federal disaster loan program. However, the federal government’s ability to open an investigation does not mean it has the ability to prove criminal charges. In order to prove criminal charges in a federal prosecution, federal prosecutors must establish criminal guilt beyond a reasonable doubt. For example, if you received a wire transfer for an EIDL loan from the U.S. Treasury in which another person’s identity was used to commit fraud, this fact alone does not establish criminal guilt. Without evidence establishing both a fraudulent scheme and your intent to participate, your receipt of the proceeds does not equal proof of guilt. If the evidence in your case does not establish criminal guilt, you deserve to rely on the experience, skills, and knowledge of a federal defense law firm to protect your rights and preserve your freedom. We work to protect our clients’ rights under all circumstances.

Which Federal Charges Can Accompany an EIDL Identity Allegation?

Aggravated identity theft is one of many charges federal prosecutors have at their disposal in EIDL fraud cases. Depending on the facts, they may also seek to prove you committed any of the following federal offenses:

Wire Fraud

The federal crime of wire fraud is prosecuted under 18 U.S.C. § 1343. Under Section 1343, transmitting writings, signs, signals, pictures, or sounds by wire, radio, or television communication in interstate or foreign commerce to execute a scheme to defraud is punishable by up to 20 years in the ordinary case, but up to 30 years when the violation involves a benefit connected to a presidentially declared major disaster or emergency. Given the nature of federal loan programs and online applications, wire fraud is commonly charged alongside identity-theft allegations in EIDL fraud cases.

Bank Fraud

Similar to wire fraud, the federal crime of bank fraud is prosecuted under 18 U.S.C. § 1344, which applies to schemes to defraud a financial institution or to obtain property owned by or under the custody or control of a financial institution through false or fraudulent pretenses. A conviction for a violation of Section 1344 can lead to a statutory maximum sentence of 30 years in federal prison. In cases involving identity theft and loan applications, bank fraud charges are common, especially when the loan applicant provides false or fraudulent information to the lender.

The federal crime of bank fraud can also involve schemes to defraud lenders who are not technically banks, such as financial institutions that are federally insured. This can include credit unions with federally insured accounts and other entities that meet the statutory definition of a financial institution. In many cases involving EIDL fraud, this charge may be used, as well as other charges such as wire fraud.

Major-Disaster Benefit Fraud

Major-disaster benefit fraud is a federal offense addressed under 18 U.S.C. § 1040, and it can involve knowingly making false statements in connection with obtaining benefits, and benefits include benefits for disaster loans and otherwise. This federal statute provides for up to 30 years in prison, but this amount can vary based on the specific charge(s) involved. The disaster benefit fraud statute can apply to persons who fraudulently sought or obtained EIDL benefits and benefits from other assistance programs related to major disasters in the United States.

Who May Owe the EIDL Debt When the Borrower is Accused of Fraud?

The EIDL loan is a debt. And, when the borrower is accused of identity theft, it is not clear how the government may proceed to collect EIDL debt if the loan documents are a product of fraud.

Can an EIDL loan lead to personal liability for a business owner in any scenario? The short answer is yes, but it depends on the answers to the following questions: Is the business owner the borrower? Does the business owner provide a personal guarantee? Does the business owner provide a personal interest in the business’s assets as collateral for the EIDL loan? And, does the business owner have personal liability under the terms of the EIDL loan documents?

A business owner is not personally liable solely because an EIDL exists. Instead, personal liability for EIDL debt depends on the particular circumstances in each case. This includes the type of loan that is at issue. However, in cases involving allegations of identity theft or fraudulent use of loan funds, the SBA-OIG is likely to proceed to seek the collection of the EIDL loan as the borrower’s identity is at issue.

There is a significant difference between loan collection and criminal prosecution. Loan collection efforts are intended to collect the proceeds of loans that were unlawfully obtained, while criminal prosecutions are intended to prove the guilt of the loan recipient and hold that individual criminally liable for the alleged conduct. In the event of fraud, criminal penalties may also include the requirement that the defendant pay restitution to the government.

Are EIDL debts categorically nondischargeable in bankruptcy proceedings? While an EIDL loan obtained through fraudulent means may be nondischargeable under 11 U.S.C. § 523(a)(2), these types of loans are not categorically nondischargeable. Discharging EIDL debt may be possible, but it may be extremely difficult to successfully challenge the nondischargeability of a loan that has been procured through fraudulent means.

Are EIDL funds considered grant funds? No, EIDL loans are debts, unlike most other pandemic-era grant programs. This means that failure to repay an EIDL loan does not by itself establish loan fraud, which generally requires proof of a fraudulent scheme and the requisite intent.

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