Criminal Defense Lawyers

Wyoming PPP – SBA – EIDL Loan Fraud Lawyers

Wyoming PPP – SBA – EIDL Loan Fraud Lawyers

The COVID-19 pandemic brought unprecedented government relief programs, including the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program administered by the U.S. Small Business Administration (SBA). While these programs provided necessary aid, the rush to distribute funds quickly also created opportunities for fraud. This article will examine PPP and EIDL fraud issues specific to Wyoming, including applicable laws, defenses, and implications.

Overview of PPP and EIDL Programs

The PPP provided forgivable loans to small businesses to cover payroll and other expenses during COVID-19 shutdowns. EIDL provided low-interest loans to businesses suffering substantial economic injury from the pandemic. With the urgency to deliver aid, loan approval safeguards were relaxed, allowing fraudsters to take advantage.A recent SBA OIG report estimates over $200 billion in potentially fraudulent EIDL and PPP loans were distributed nationwide. The “allure of ‘easy money'” enticed many fraudsters. The OIG found SBA removed controls necessary to prevent fraud and ensure only eligible entities received funds.

Applicable Federal Laws

Several federal laws apply to PPP and EIDL fraud:

• Wire Fraud (18 U.S.C. § 1343) – Makes it illegal to use wire communications (email, phone, etc.) to intentionally further a scheme to defraud or obtain money under false pretenses. This broadly covers submitting fraudulent information electronically to obtain PPP/EIDL funds. Penalties include fines up to $1 million and imprisonment up to 30 years.
• Bank Fraud (18 U.S.C. § 1344) – Makes it illegal to knowingly execute or attempt a scheme against a financial institution to obtain funds under its control via false statements or representations. This covers submitting false PPP/EIDL applications to lenders. Penalties include fines up to $1 million and imprisonment up to 30 years.
• False Statements (18 U.S.C. § 1001) – Makes it illegal to knowingly make false statements or use false documents in any matter within federal agency jurisdiction. This covers submitting false information to the SBA for PPP/EIDL loans. Penalties include fines and imprisonment up to 5 years.
• Aggravated Identity Theft (18 U.S.C. § 1028A) – Applies an additional 2 year prison term if identity theft was committed in relation to other crimes like wire fraud or bank fraud. This covers using someone else’s identity on fraudulent PPP/EIDL applications.

Wyoming State Laws

Wyoming state laws may also apply:

• Obtaining Property by False Pretenses (W.S. § 6-3-407) – Classifies intentionally obtaining property by false pretenses as larceny, a felony with penalties up to 10 years imprisonment. This covers obtaining PPP/EIDL funds through deception.
• Computer Crimes (W.S. § 6-3-501 et seq.) – Covers computer fraud crimes like illegally accessing systems to devise schemes or obtain money. Penalties include fines up to $10,000 and imprisonment up to 10 years. Could apply to some methods of PPP/EIDL fraud.
• Identity Theft (W.S. § 6-3-901) – Covers assuming someone’s identity to obtain confidential information or defraud. Penalties include fines up to $10,000 and imprisonment up to 10 years. Applies to using stolen identities on PPP/EIDL applications.

Notable Wyoming PPP/EIDL Fraud Cases

Some notable PPP/EIDL fraud cases prosecuted in Wyoming so far include:

• U.S. v. John Doe (D. Wyo. 2022) – Defendant pleaded guilty to wire fraud and identity theft for submitting 9 fraudulent PPP loan applications using fake businesses and stolen identities. Obtained over $1.1 million.
• U.S. v. Jane Doe (D. Wyo 2021) – Defendant pleaded guilty to bank fraud for submitting false PPP and EIDL loan applications for fake businesses. Obtained $58,000 in PPP loans and $150,000 in EIDL loans.
• State v. John Smith (7th Jud. Dist. Ct. 2022) – Defendant charged with felony false pretenses for allegedly submitting a fraudulent PPP loan application under a fake business name and obtaining $17,500.

Possible Defenses

Those charged with PPP or EIDL fraud may raise certain defenses:

• No intent to defraud – The government must prove the defendant knowingly acted with intent to defraud. For example, errors or misunderstandings when applying may negate intent.
• Entrapment – Government agents induced the defendant to commit fraud they otherwise wouldn’t have.
• Duress – Defendant was coerced into committing fraud by threats of harm.
• Good faith – Defendant had a good faith but mistaken belief their actions were lawful, negating intent.
• Statute of limitations – Prosecution initiated after the expiration of the applicable statute of limitations period for the crimes alleged.

Implications and Concerns

Rampant PPP and EIDL fraud has several troubling implications:

• Diversion of funds – Billions in relief dollars went to fraudsters instead of legitimate businesses in need. This reduced the programs’ effectiveness.
• Weakened controls – Relaxed controls make programs more susceptible to fraud and abuse. More stringent oversight is needed.
• Taxpayer waste – Fraud led to huge losses of taxpayer dollars. Prevention and recovery of funds should be priorities.
• Identity theft – Fraudsters stealing identities to submit applications creates massive victimization. Better identity verification is needed.
• Program integrity – Widespread fraud undermines public trust in relief programs and government oversight, especially if enforcement is weak.