06 Aug 23

PPP Loan Fraud & Whistleblower Defense

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Last Updated on: 6th August 2023, 07:25 pm

The Paycheck Protection Program (PPP) was authorized under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that was passed in the spring of 2020. The original deadline for businesses to apply for these loans was June 30, then it was extended to August. The program reopened for more applications in January 2021. Rumors about PPP fraud resulted in the Small Business Administration (SBA) asking whistleblowers to report misuse of the funds. We defend companies that are under investigation for fraud related to PPP loans.

SBA Audits
The SBA is auditing recipients of PPP loans in order to find cases of fraud. If evidence of fraud is detected, the Department of Justice pursues the case in federal court. If your company got one of these loans, you could be facing federal loan fraud charges. It’s important to get legal representation as soon as possible if your business is under investigation for such charges.

Risks to Your Business from Whistleblowers
The federal government runs several programs under which whistleblowers get a portion of the amount of damages recovered by their prosecution of fraudulent business activities. Under the False Claims Act, whistleblowers can get up to 30% of the damages from the case. The Department of Justice uses the False Claims Act to prosecute a majority of the fraud allegations related to the PPP. The whistleblower who files the first claim, even if it’s a general claim, can get this reward. That’s a big incentive for someone to make allegations against your company.

Could Your Company Fall Victim to PPP Loan Fraud Allegations?
It’s critical to have a strategic defense against any allegation of PPP fraud. We tailor the response to whistleblower lawsuits differently than other types of fraud allegations. The PPP came with many strings attached, and we’ll examine your documentation and books in order to defend your case within the Department of Justice’s prosecution process. We have a clear understanding of how these claims are investigated and prosecuted, and our track record of resolving them will help with your case, too.

Possible Defenses for PPP Loan Fraud Allegations
We use well-established defense strategies against charges from the False Claims Act and other whistleblower laws. Our attorneys use the evidence and find deficiencies in the whistleblower’s argument in order to pursue a result that’s in your favor. Our lawyers may also file a motion to dismiss your case. We present decisive evidence in your favor, such as the whistleblower’s intent to do you harm and evidence that shows you legitimately received and used the PPP loan funds.

Whistleblower allegations are often flawed, and one defense strategy we use is demonstrating that the use of federal resources into the allegations against your business aren’t worthwhile. Getting federal charges dismissed is complicated, which is why it’s wise to choose lawyers with experience in dealing with federal loan fraud cases. We can also assess whether or not it’s in your interest to settle with the government in your loan fraud allegation case.

The Department of Justice is investigating many whistleblower claims of PPP fraud. Many of those cases are international. The limited oversight of the PPP program made it easy for some individuals and companies both in and outside the United States to get funds they weren’t qualified to receive. Whistleblowers know this, too, and many file claims just to see if they can get the reward. If a claim is carefully worded and general, the whistleblower is unlikely to be punished if their allegation is found to be false. With few negatives and a potentially large payoff, a whistleblower may be enticed to file false claims. Our attorneys assess whether this could be a good defense strategy for your company.

PPP Compliance
Our lawyers also help you examine if you’re in compliance with the PPP’s terms. It’s possible that an unintentional error caused your company to misuse funds. By showing that the error was unintentional, our lawyers could help you avoid prosecution.

Possible Consequences of PPP Loan Fraud Charges
Federal prosecutors may levy fines for convictions related to PPP loan fraud allegations. Some company owners, accountants and chief financial officers have faced decades of federal prison time related to PPP fraud. Just the allegations of fraud could harm your personal reputation and the reputation of your business. If the federal government subpoenas your bank, your funds could be frozen. A frozen business account could result in your company permanently closing its doors. Few companies can do without the cash they have in the bank while they wait out the long amount of time that it takes the federal government to prosecute a loan fraud case.

If you’re facing a PPP loan fraud case or think you’re at risk of such charges, reach out to us at Lawscape today. We offer no-cost initial consultations with our federal defense attorneys.