How Much Jail Time for $20 Million in PPP Loan Fraud?

How Much Jail Time for $20 Million in PPP Loan Fraud?

The Paycheck Protection Program (PPP) was created in 2020 under the CARES Act to provide forgivable loans to small businesses struggling during the COVID-19 pandemic. However, some business owners and individuals took advantage of the rushed rollout of the program and fraudulently obtained loans. So how much jail time could someone face for defrauding the government out of $20 million in PPP funds?

PPP Loan Fraud Penalties

While the CARES Act itself does not contain specific penalties for PPP fraud, prosecutors can bring charges under pre-existing federal fraud statutes. Some of the main charges used in PPP fraud cases include:

• Bank Fraud – Up to 30 years in prison and $1 million fine (18 U.S.C. § 1344)
• Wire Fraud – Up to 20 years in prison and $250,000 fine (18 U.S.C. § 1343)
• False Statements – Up to 5 years in prison and $250,000 fine (18 U.S.C. § 1001)
• Aggravated Identity Theft – Mandatory 2 years in prison consecutive to any other sentence (18 U.S.C. § 1028A)
• Money Laundering – Up to 20 years in prison and $500,000 fine (18 U.S.C. § 1956)

In addition, prosecutors can bring charges of conspiracy (18 U.S.C. § 371) and attempt (18 U.S.C. § 1349) which carry similar penalties to the underlying fraud charges.

Sentencing Factors

For a $20 million PPP loan fraud scheme, a defendant is likely facing a sizable sentence even under the fraud statutes with lower maximums. Some of the main factors judges consider at sentencing include:

• The amount of loss caused by the fraud
• The number of victims impacted
• The defendant’s role as an organizer or leader
• Whether the defendant has a criminal history
• Whether the defendant has accepted responsibility

In this case with a $20 million loss to taxpayers, the judge may view general deterrence as an important sentencing factor to discourage such a sizable fraud in the future.

Sentencing Examples

Here are some real examples of PPP fraud sentences to provide an idea of the potential jail time for a $20 million case:

• A Texas engineer received over 3 years in prison for fraudulently obtaining $1.6 million in PPP loans.
• The owner of a Virginia construction company received over 5 years in prison for obtaining $6.7 million in fraudulent PPP loans.
• An Ohio pastor received nearly 6 years in prison for fraudulently obtaining $2.2 million in PPP loans.

Based on cases so far, a defendant responsible for $20 million in fraud would likely receive a sentence of 10+ years in federal prison, even with a plea agreement providing some sentencing reduction.

Restitution & Forfeiture

In addition to a lengthy prison sentence, the defendant would be ordered to pay full restitution of $20 million to the government. The judge may also order forfeiture requiring the defendant to surrender assets obtained from the fraud scheme.

For example, in one North Carolina PPP fraud case, the defendant obtained over $100,000 in fraudulent loans and was ordered to forfeit the $55,000 Mercedes-Benz he purchased with the proceeds.

Avoiding PPP Fraud Charges

If you obtained a PPP loan, focus on using the funds legally and properly documenting your expenses. Be transparent in the forgiveness process and quickly correct any mistakes that may have been made on your application or in your records.

If you believe you are under investigation for PPP fraud, consult with an attorney right away about your defense options. An experienced lawyer can review your case and advise you on responding to investigators and negotiating an favorable outcome where possible.

Committing fraud is never the answer, no matter the circumstances. Being transparent and taking accountability from the outset provides the best chance at avoiding criminal charges.

Resources

For further reading on PPP fraud issues and cases, check out the following resources:

• r/pppfraud on Reddit – Subreddit discussing PPP fraud cases
• DOJ Sentencing Video – Short DOJ video on PPP fraud sentencing
• DOJ Fraud Case – Press release on multi-million COVID relief fraud prosecution