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New Orleans PPP – SBA – EIDL Loan Fraud Lawyers

March 21, 2024 Uncategorized

New Orleans PPP Loan Fraud Lawyers – An In-Depth Look

The Paycheck Protection Program (PPP) was created in 2020 as part of the CARES Act to provide emergency loans to small businesses impacted by COVID-19. These loans were intended to help businesses retain employees and cover other expenses during pandemic shutdowns. While the PPP provided a lifeline for many legitimate small businesses, the rapid rollout and lack of oversight also created opportunities for fraud.In New Orleans and across Louisiana, PPP loan fraud has become a major issue. With billions of dollars flowing rapidly into the program, scammers and dishonest business owners took advantage by submitting fraudulent loan applications, falsifying payroll and tax documents, laundering money, and misusing loan funds. Now federal prosecutors are cracking down and charging dozens of defendants in Louisiana with PPP loan fraud, wire fraud, bank fraud, money laundering, and other crimes.For those charged with PPP loan fraud in the New Orleans area, having an experienced white collar criminal defense lawyer can be crucial. These federal cases can be complex, with severe penalties if convicted. A knowledgeable attorney understands the specific elements prosecutors must prove, the potential defenses, and how to negotiate with the U.S. Attorney’s Office. They know how to scrutinize the evidence, protect your rights, and develop an effective strategy for achieving the best possible outcome.

How PPP Loan Fraud Typically Occurs in New Orleans

There are a few common schemes that federal prosecutors in New Orleans are seeing with PPP loan fraud cases:

  • Falsified loan applications – This is one of the most frequent types of fraud. It involves fabricating the number of employees, payroll expenses, taxes, or other information on a PPP loan application in order to get a larger loan amount or qualify for a loan that the business wasn’t actually eligible for. Prosecutors say many defendants exaggerated employee numbers, inflated past payroll costs, faked tax documents, and lied about how the funds would be used.
  • Identity theft – Some defendants stole or purchased stolen personal information to apply for PPP loans in other people’s names without their consent. The identity thieves then had the loan proceeds deposited into accounts they controlled. This is a version of the classic identity theft scheme tailored to exploit the PPP program.
  • Fake businesses – In other cases, individuals applied for PPP loans using shell companies, fake businesses, or inactive business entities solely to collect loan funds for personal use. Some fabricated documents to make it appear the business was operating when it wasn’t.
  • Misuse of funds – Under PPP program rules, the loan funds were required to be used for specific allowable expenses like payroll, rent, mortgage interest, or utilities. However, many loan recipients disregarded these rules and spent the money on unauthorized purposes like personal purchases, home improvements, travel, luxury items, or stock market investments. Using PPP funds for non-business expenses is illegal.
  • Kickback schemes – Some unscrupulous loan officers or brokers took bribes in exchange for facilitating fraudulent PPP loans, falsifying documents, or approving loans for ineligible recipients. Others charged illegal fees to process applications. These kickback schemes often involved bank insiders abusing their positions to benefit from the government program.

Charges and Penalties for PPP Loan Fraud

In New Orleans, PPP loan fraud cases are primarily prosecuted by the U.S. Attorney’s Office for the Eastern District of Louisiana. These white collar prosecutors have been aggressive about pursuing fraud in COVID relief programs.The most common charges filed in PPP loan fraud indictments include:

  • Wire fraud
  • Bank fraud
  • Making false statements to a financial institution
  • Money laundering
  • Aggravated identity theft

Defendants also face allegations of conspiracy to commit fraud, which can extend liability to all members of the scheme.Penalties can be severe depending on the specific offenses and dollar amounts involved. Wire fraud and bank fraud each carry maximum sentences of 30 years in prison and $1 million fines. Aggravated identity theft has a mandatory consecutive 2-year prison term. Fines can also include restitution and forfeiture of ill-gotten gains. For large frauds or defendants with criminal histories, federal sentencing guidelines can recommend stiff prison sentences.

Defenses in PPP Loan Fraud Cases

When building a defense, New Orleans white collar crime lawyers will carefully examine the prosecution’s evidence for any weaknesses, mistakes, or lack of proof for key elements of the charges. Some potential defenses include:

  • No intent to defraud – An essential element of federal fraud charges is intent to defraud. The defense may argue the defendant acted in good faith without intent to deceive the lender or government.
  • Loan funds properly used – If loan proceeds were ultimately spent on legitimate business expenses, this undercuts charges of misusing funds or that the loan itself was fraudulent.
  • Truthful application – Asserting the PPP loan application was accurate and truthful contradicts allegations of making false statements to obtain the loan.
  • Minimal loss amount – The defense may claim the lender or government suffered little to no actual loss, which can weaken the case.
  • Duress or coercion – In identity theft schemes, defendants may claim they were forced or coerced into the scheme by others.
  • Blaming others – With multiple defendants, each may try to shift blame onto the other participants.

An experienced federal fraud lawyer can analyze the prosecution’s legal theories and evidence and determine the strongest defense arguments to raise on your behalf.

Negotiating with the U.S. Attorney’s Office

After thoroughly investigating the case, the defense lawyer will also engage in negotiations with the Assistant U.S. Attorney handling the prosecution. There may be opportunities to get charges reduced or dismissed through pretrial diversion agreements. Or if charges remain, the defense can seek a favorable plea bargain.An effective negotiator can convince prosecutors to drop certain charges or recommend leniency at sentencing in exchange for:

  • Cooperating against other defendants
  • Restitution payments
  • Accepting responsibility and pleading guilty

Even if a case goes to trial and ends in a conviction, the lawyer’s relationships and credibility with prosecutors can still help at sentencing. In some cases, non-trial dispositions result in probation or house arrest rather than imprisonment.Having an experienced former federal prosecutor on your side levels the playing field during negotiations. They know the process, the players, and how to craft deals that protect your rights.

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