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How Much Prison Time for PPP Loan Fraud Over $20 Million?
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How Much Prison Time for PPP Loan Fraud Over $20 Million?
The Paycheck Protection Program (PPP) was launched in 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency loans to small businesses impacted by the COVID-19 pandemic. While the PPP provided a lifeline to many struggling companies, the hastily-launched program was also exploited by fraudsters who illegally obtained funds. So what are the potential penalties for PPP loan fraud over $20 million?
Scope of PPP Fraud
According to reports, at least $200 billion in potentially fraudulent PPP loans were disbursed. The Small Business Administration (SBA) estimates over 90,000 “actionable leads” related to COVID-19 loan fraud across various relief programs. While the full extent may never be known, PPP fraud is being described as “the biggest fraud in a generation.”
Charges and Penalties
The Department of Justice (DOJ) is aggressively prosecuting PPP fraud using charges like wire fraud, bank fraud, making false statements, and aggravated identity theft. According to one case, the leader of a group that obtained $20 million through fraudulent PPP loans was sentenced to 15 years in prison.
While the CARES Act does not itself authorize criminal penalties, pre-existing statutes used to prosecute financial fraud offer harsh sentences:
- Wire Fraud – Up to 30 years imprisonment and $1 million fine
- Bank Fraud – Up to 30 years imprisonment and $1 million fine
- Making False Statements – Up to 30 years imprisonment and $1 million fine
- Aggravated Identity Theft – Mandatory 2 years imprisonment consecutive to any other term
The DOJ can also pursue forfeiture of fraudulently-obtained PPP funds and seizure of assets purchased with the money.
Notable PPP Fraud Cases
Some notable PPP fraud cases prosecuted by the DOJ include:
- A Houston man sentenced to 15 years for leading a group that obtained $20 million in PPP loans, using the money to purchase houses, cars, and other luxury items.
- A Texas man convicted for obtaining over $35 million through more than 80 fraudulent loan applications.
- A father and son in North Carolina sentenced to 4 and 7 years in prison respectively for obtaining $1.7 million in PPP loans.
The DOJ has already prosecuted over 200 defendants in more than 130 PPP fraud cases and recovered over $78 million as of late 2022. These cases demonstrate the serious penalties defendants face, especially those involved in multi-million dollar fraud schemes.
Avoiding PPP Fraud Charges
Any individual or business that obtained PPP loans can reduce the risk of charges by:
- Ensuring all information provided in applications was accurate and truthful
- Using the funds only for approved purposes like payroll, rent, utilities, etc.
- Maintaining detailed records regarding the loan and spending
- Cooperating fully during any audit or investigation
If contacted regarding suspicious activity, immediately consult a federal criminal defense lawyer before speaking to investigators. An experienced attorney can properly protect rights and advocate for the best resolution.
Getting Legal Help for PPP Fraud
Facing charges or an investigation for PPP loan fraud can jeopardize livelihoods and freedom. With harsh penalties on the table, building a strong defense with an excellent lawyer is critical. Federal fraud defense attorneys can analyze the case details and determine the best strategies based on the specific situation.
It’s advisable to engage experienced legal help immediately if contacted regarding PPP fraud or abuse. Skilled lawyers have defended these complex cases and can guide clients to the most favorable outcome possible. For companies or executives facing multi-million dollar PPP fraud accusations, the stakes are especially high, making legal guidance more crucial than ever.
While PPP loan fraud carries potentially lengthy prison sentences in extreme cases, punishment is determined on an individual basis considering the offense’s scope and circumstances. Regardless of the situation, knowledgeable legal counsel gives clients the best chance to mitigate damages and preserve their future.