What Are the Sentencing Guidelines for Large PPP Fraud?

What Are the Sentencing Guidelines for Large PPP Fraud?

The Paycheck Protection Program (PPP) was created in 2020 to provide emergency financial assistance to small businesses impacted by the COVID-19 pandemic. While the PPP provided a lifeline to millions of businesses, the hastily rolled out program was also exploited by fraudsters who illegally obtained billions in PPP loans.

The Department of Justice is aggressively prosecuting cases of large-scale PPP fraud under several federal statutes. For defendants convicted of stealing hundreds of thousands or millions in PPP loans, sentencing guidelines and statutory penalties can result in years or even decades in prison.

Key Federal Laws Used to Prosecute Large PPP Fraud

Prosecutors frequently charge PPP fraud under the following laws, each carrying potentially severe sentences:

• Wire Fraud – 18 U.S.C. § 1343: Up to 30 years imprisonment and $1 million fine
• Bank Fraud – 18 U.S.C. § 1344: Up to 30 years imprisonment and $1 million fine
• Making False Statements – 18 U.S.C. § 1001: Up to 5 years imprisonment
• Money Laundering – 18 U.S.C. § 1956: Up to 20 years imprisonment per count

Harsh penalties apply whether PPP fraud was completed or just attempted under federal conspiracy charges.

Sentencing Guidelines Calculation

While statutes set maximum sentences, federal sentencing guidelines determine prison time and fines on a sliding scale based on factors like:

• Loan amount obtained by fraud
• Number of victims
• Acceptance of responsibility
• Defendant’s criminal history

This calculation produces a recommended sentencing range that judges generally adhere to.

Intended Loss Drives Sentence Length

A key concept is intended loss – the amount defendants attempted to steal through fraud. Intended loss, rather than actual loss, drives sentencing even if the scheme was unsuccessful. This aims to deter attempting large frauds.

For example, trying to steal $5 million results in the same sentence as successfully stealing $5 million. Intended loss amount has an outsized impact on the final guidelines range and sentence length.

Enhancements for PPP Fraud

The guidelines also increase sentences for factors like:

• Crime committed during presidentially-declared emergency or disaster
• Misrepresentation of a governmental entity
• Jeopardizing the safety and soundness of a financial institution

These enhancements apply to nearly all PPP cases, driving longer sentences.

Review of Recent PPP Fraud Sentences

PPP fraud sentences have widely ranged from probation up to over 12 years in prison based on specific case factors. But most defendants do serve at least some prison time.

For context, here are sentencing details in four recent large PPP fraud cases:

As these examples show, prison time correlates to higher intended loss amounts. But even in the case involving less than $500k, the defendant still served 1 year behind bars.

Sentencing Considerations for Judges

Federal judges determine sentences case-by-case while considering factors like:

• Guidelines range based on intended loss
• Restitution to victims
• Acceptance of responsibility
• Defendant’s community ties
• Risk of recidivism

Judges may balance these factors to impose appropriate sentences – though they tend to stick closely to the calculated guidelines range.

Takeaways on PPP Fraud Sentencing Guidelines

The bottom line is that penalties for large PPP fraud can be severe, with multi-year prison sentences and restitution orders in the millions.

While judges consider individual circumstances case-by-case, lengthy incarceration is common due to the intended loan loss driving up sentencing ranges.

With the Department of Justice aggressively prosecuting PPP fraud, potential defendants should consult with experienced legal counsel to understand their sentencing exposure and options.

The risks of attempting multi-hundred thousand or million dollar PPP schemes outweigh any potential rewards.

If you require legal advice regarding PPP fraud charges or sentencing guidance, contact a lawyer right away.