Criminal Defense Lawyers

Indianapolis PPP – SBA – EIDL Loan Fraud Lawyers

Indianapolis PPP – SBA – EIDL Loan Fraud Lawyers

The COVID-19 pandemic brought unprecedented challenges, and the US government responded with massive stimulus packages aimed at providing financial relief. A key component was the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs administered by the Small Business Administration (SBA). While these programs threw a critical lifeline to many businesses and employees, the speed and scale inevitably opened the door to significant fraud.In Indianapolis and across Indiana, PPP and EIDL fraud is a major concern. The US Department of Justice has prosecuted numerous cases of individuals illegally obtaining these loans. For those accused of PPP or EIDL fraud, having an experienced legal team can be crucial. Indianapolis white collar defense attorneys understand these complex cases and build sophisticated defenses to fight the charges.

Overview of PPP and EIDL Loan Programs

The Coronavirus Aid, Relief, and Economic Security (CARES) Act established the PPP in March 2020. This provided potentially forgivable loans to small businesses to cover payroll, rent, utilities and other expenses. Initially funded with $349 billion, Congress added over $300 billion more as the program proved wildly popular. Loans are administered through private lenders but guaranteed 100% by the SBA.EIDL loans have been around for decades to help businesses hit by disasters, but the CARES Act expanded the program for COVID-19. These working capital loans up to $2 million have a 3.75% interest rate and 30-year term. The SBA also offered EIDL Advance grants of up to $10,000 that did not need to be repaid.With the goal of getting money out quickly, loan approval was streamlined and eligibility requirements loosened. Applicants simply had to certify they met the criteria, such as being impacted by COVID and having under 500 employees. While this allowed over $800 billion to rapidly flow to workers and businesses in need, it also allowed fraudsters easy access.

Scope of PPP and EIDL Fraud

In June 2022, the SBA Office of the Inspector General estimated over $200 billion of the COVID relief loans were fraudulent, among the highest rates for any government program. Their report found $79 billion in potentially fraudulent EIDL loans, $4.6 billion in EIDL Advances, and $4.5 billion in PPP loans. This represents about 16% of total COVID relief lending.The Justice Department has prosecuted over 150 defendants in more than 95 criminal cases involving PPP or EIDL fraud as of January 2023. These cases involved over $75 million in loans, and many investigations are ongoing. The pace of prosecutions increased in late 2022 as statutes of limitations approached.There are several typical schemes used by fraudsters:

• Fake businesses – Applications filed using sham companies, or on behalf of real companies without their consent. Proceeds pocketed with no intent to pay employees or operating expenses.
• Identity theft – Using stolen personal information to apply for loans as an imposter.
• Double dipping – Obtaining multiple loans by applying to several lenders.
• Exaggerated claims – Lying on applications about number of employees, payroll, or revenue to maximize loan amounts.
• Misuse of funds – Spending loan proceeds on personal purchases instead of approved business expenses.

Some indications of potential PPP or EIDL fraud include:

• Businesses formed right before pandemic
• Companies not found in state registration records
• Same phone, address, bank account on multiple applications
• Loan amounts exceeding business’s typical payroll or revenue
• Social media showing unapproved purchases like vacations, cars, homes

PPP and EIDL Fraud Charges

Prosecutors have an array of federal charges they can bring around pandemic loan fraud:

• Wire fraud – Scheme to defraud using interstate wires, up to 20 years imprisonment
• Bank fraud – Scheme to defraud a bank, up to 30 years imprisonment
• False statements – Lying on loan applications, up to 5 years imprisonment
• Aggravated identity theft – Using someone else’s identity in a crime, mandatory 2 years imprisonment
• Money laundering – Disguising illegal proceeds, up to 20 years imprisonment

Defendants often face multiple charges that can add up to decades behind bars. Restitution of the fraud proceeds is typically ordered as well.

Defending PPP and EIDL Fraud Cases

Facing federal criminal charges for allegedly bilking pandemic relief programs is extremely serious. The government invests substantial resources investigating and prosecuting PPP and EIDL fraud across the country.An experienced Indianapolis white collar criminal defense lawyer can thoroughly analyze the government’s evidence and identify weaknesses in their case. Some possible defenses include:

• No intent to defraud – The business genuinely intended to use funds properly but circumstances changed.
• Mistake or negligence – Any misstatements on applications were unintentional mistakes rather than willful lies.
• Lack of knowledge – Owner was unaware of fraud committed by employee or advisor.
• Statute of limitations – Prosecutors failed to bring charges within 5-year limit.
• Unconstitutional selective prosecution – Government unfairly targeted defendant based on race, religion, or other protected class.
• Entrapment – Government encouraged the fraud rather than defendant originating the idea.

An attorney may also seek to suppress evidence improperly obtained by search warrants. And they can negotiate with prosecutors for plea deals or pretrial diversions to avoid convictions.Defending complex financial fraud cases requires an experienced federal criminal defense lawyer. They understand how prosecutors build these cases and the intricacies of the PPP and EIDL programs. This allows them to craft an aggressive defense to get charges reduced or dismissed.

What to Do if You Are Being Investigated

Here are important steps if you learn you are being investigated for potential PPP or EIDL fraud:

• Do NOT speak to investigators without an attorney present. Assert your right to have counsel. Do not answer questions or provide documents without your lawyer.
• Gather records now like bank statements, tax returns, loan documents, and communications. These may be relevant to your defense.
• Consult an attorney immediately. An experienced lawyer can engage with investigators and prosecutors to protect your rights.
• Follow your lawyer’s advice about responding to subpoenas, testifying before grand juries, or producing records. Do not take actions that could damage your case without their guidance.
• Avoid actions that could be viewed as obstructing the investigation. Do not destroy records, lie, or otherwise impede government inquiries.