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California PPP – SBA – EIDL Loan Fraud Lawyers

March 21, 2024 Uncategorized

California PPP – SBA – EIDL Loan Fraud Lawyers

The COVID-19 pandemic brought immense hardship for many small businesses in California and across the country. To provide relief, the federal government offered financial assistance through programs like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. While these programs were a lifeline for struggling companies, some business owners are now facing allegations of fraud related to obtaining these loans.

If you are being investigated or charged for potential PPP or EIDL fraud in California, it is critical to have an experienced defense lawyer on your side. This article will provide an overview of these loan programs, typical fraud allegations, viable defenses, and tips on finding the right attorney.

Overview of PPP and EIDL Programs

The PPP and EIDL programs were created in 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help businesses impacted by the pandemic.

  • PPP offered potentially forgivable loans to help companies retain employees and cover expenses like payroll, rent, and utilities.
  • EIDL provided low-interest loans for working capital and normal operating costs.

With billions of dollars being rapidly distributed through these new programs, fraud was unfortunately inevitable. The Department of Justice is aggressively pursuing PPP and EIDL fraud cases across California. In the Central District alone, federal prosecutors have charged multiple defendants with millions in alleged pandemic relief fraud.

The penalties can be severe, including multi-year prison sentences and orders to repay all funds obtained. For business owners facing accusations, the stakes are incredibly high.

Common Allegations in PPP and EIDL Fraud Cases

There are a variety of ways prosecutors can allege fraud relating to PPP loans, EIDL loans, or both. Some common allegations include:

  • Submitting false or misleading information on loan applications regarding number of employees, payroll expenses, cost of goods sold, or other figures used to calculate loan amounts.
  • Using PPP funds for unauthorized purposes instead of allowable expenditures like payroll, rent, utilities, etc.
  • Failing to accurately report revenue and expenses when applying for loan forgiveness.
  • Applying for and receiving multiple PPP and/or EIDL loans for the same business expenses.
  • Applying for loans under multiple business names or on behalf of defunct, non-operational, or sham businesses.
  • Colluding with lenders, brokers, or insiders to obtain loans the business was not qualified to receive.

The government does not need to prove intent to defraud. Even accidental misstatements or misunderstandings of program rules can lead to criminal charges.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
Very professional, very transparent, over all a great experience
Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Viable Defenses Against PPP and EIDL Fraud Allegations

Given the complexity of the PPP and EIDL programs and speed with which loans were distributed, there are often viable defenses in fraud cases. A knowledgeable attorney can evaluate if any of these may apply:

  • Lack of intent – There is no evidence you deliberately tried to mislead lenders or misuse funds. Innocent mistakes happen.
  • Ambiguous program rules – PPP and EIDL policies were unclear or changed frequently. You may have misunderstood how to calculate figures or use funds appropriately.
  • Lender errors – The lender made mistakes in processing your application or failed to provide clear guidance.
  • Selective prosecution – You may have been unfairly targeted for investigation compared to other loan recipients.

An experienced federal fraud defense attorney can analyze the facts of your case to determine the strongest defenses. Viable defenses combined with effective negotiation by your lawyer can potentially lead to reduced charges or even avoidance of criminal prosecution altogether.

Why Hiring a Lawyer is Crucial

Attempting to navigate PPP or EIDL fraud accusations without an attorney is extremely unwise. These are complex cases with harsh potential penalties. A knowledgeable federal defense lawyer has the skills and experience to protect your rights:

  • They understand the intricate PPP and EIDL program rules and typical fraud allegations.
  • They can convince prosecutors weaknesses in evidence or viable defenses should prevent charges from being filed.

Hiring an attorney early when you learn you are under investigation is ideal. Involving counsel immediately can sometimes resolve matters quickly before charges are even filed.

Selecting the Right Fraud Defense Attorney

Choosing the right lawyer is crucial when facing federal fraud accusations that could result in prison time, heavy fines, and other serious consequences. Key credentials to seek in a PPP/EIDL fraud defense lawyer include:

  • Extensive experience defending white collar and financial crime cases in California’s federal courts
  • Familiarity with PPP and EIDL program rules and fraud case specifics
  • Track record getting charges dismissed pre-trial and negotiating favorable outcomes
  • Resources to handle complex cases requiring thorough investigation and analysis
  • Strong communication skills to build trust and keep you informed

When your business, livelihood, freedom, and reputation are on the line, you need an accomplished federal defense lawyer in your corner. Do not leave the fate of your case to chance. Consult with a top-rated PPP/EIDL fraud attorney as soon as possible.

The Scope of PPP and EIDL Fraud

While the PPP and EIDL programs provided desperately needed relief for millions of small businesses during COVID-19, they were also exploited by fraudsters on a massive scale.

Experts estimate that over $100 billion was stolen through fraudulent loans, making it one of the largest frauds in generations. Lax oversight and rushed distribution enabled this epidemic of cheating.

Massive Scale of Estimated Fraud

  • The SBA Inspector General estimates over $100 billion in potentially fraudulent EIDL and PPP loans were issued.
  • Independent analyses estimate $117 billion in suspicious PPP loans alone.
  • At minimum, 17% of all COVID relief funds appear to have gone to fraudsters.

The Justice Department will likely be prosecuting PPP and EIDL fraud cases for years given the huge sums stolen.

Common PPP and EIDL Fraud Schemes

Fraudsters took advantage of the rushed PPP and EIDL programs through tactics like:

  • Identity theft – Criminals used stolen personal information to apply for loans.
  • Fake businesses – Scammers fabricated business information like employees and payroll.
  • Multiple applications – Fraudsters applied for multiple loans under different business names.
  • Misuse of funds – Business owners spent loan money on personal costs instead of approved business expenses.

These schemes exploited the lack of verification and oversight in the hastily launched pandemic loan programs.

Lack of Safeguards and Oversight

Several factors enabled widespread PPP and EIDL fraud:

  • Minimal auditing of applications – Less than 0.2% received detailed SBA review.
  • Rushed launch without proper controls.
  • Desperate times – businesses hurting badly needed help.
  • Hundreds of billions available.
  • Loans forgivable if used properly.
  • Little vetting of applications or verification of information provided.

While oversight later increased, the damage was already done by the time improvements were implemented.

Federal Investigations and Charges

If federal agents suspect you of PPP or EIDL fraud, they will aggressively investigate using intimidating tactics:

  • Questioning you at your home or business without warning
  • Demanding financial records and trying to search your premises
  • Issuing subpoenas for documents
  • Having people secretly record conversations with you
  • Threatening immediate arrest if you do not cooperate

It is terrifying facing this alone. Do not speak to investigators without an attorney present. Be polite but say you won’t answer questions without counsel. Call a lawyer immediately.

Preparing an Effective Defense Strategy

An experienced lawyer can guide you on properly responding to investigators. They may also be able to negotiate with prosecutors before charges are filed, potentially resolving the case without criminal penalties.

If you are charged, your lawyer will build the strongest possible defense based on the specifics of your case. Strategies may include:

  • Arguing you had no intent to defraud and used funds properly
  • Attacking flaws in the investigation
  • Asserting confusing program rules led to misunderstandings
  • Highlighting lender errors in processing your application
  • Claiming unfair selective prosecution compared to other recipients

Your lawyer’s in-depth understanding of PPP and EIDL rules, typical fraud allegations, and federal court procedures will be crucial to fighting the charges.

Finding the Right Fraud Defense Lawyer

Choosing the attorney who will handle your fraud case is critical. Here are tips on what to look for:

  • Specialization defending federal white collar and financial crime cases – This is a niche area of law requiring specialized skills and experience.
  • Knowledge of PPP and EIDL programs – Find someone already familiar with these loans and fraud issues versus learning on the fly.
  • Track record of favorable outcomes – Aim for a lawyer with a proven ability to get charges dismissed pre-trial, keep defendants out of prison, and negotiate lenient sentences.
  • Resources to handle complex cases – Fraud defense requires substantial investigation, forensic accounting, and legal analysis. Make sure they have the bandwidth to vigorously defend you.
  • Communication skills – You’ll be working closely together under stressful circumstances, so make sure you connect well with and can trust your attorney.

Vet any lawyer thoroughly before hiring them. Your freedom and livelihood depend on choosing the right advocate.

Staying Calm and Taking Action

Getting accused of PPP or EIDL fraud is terrifying. But focus on taking the right steps:

  • Don’t panic – An experienced lawyer can help you get through this.
  • Don’t talk to investigators without counsel – Anything you say can be used against you.
  • Hire a lawyer immediately – The sooner you involve an attorney, the better. They can potentially resolve the case quickly before charges are filed.
  • Vet attorneys thoroughly – Choose someone highly experienced with PPP and EIDL cases specifically.
  • Follow your lawyer’s advice – Listen to their guidance on responding to investigators and fighting allegations.
  • Be patient – These complex cases take time to resolve. Trust your lawyer’s strategy.

Facing federal fraud accusations is daunting. But with an accomplished white collar defense lawyer guiding you, the legal process can be navigated and your rights protected. Do not go it alone. Consult with a top-rated fraud attorney as soon as possible for help responding to investigators and building your strongest defense.

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Todd Spodek

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RALPH P. FRANCHO, JR

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JEREMY FEIGENBAUM

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ELIZABETH GARVEY

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CLAIRE BANKS

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RAJESH BARUA

Of-Counsel

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CHAD LEWIN

Of-Counsel

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