Delaware PPP Loan Fraud Lawyers.

When people speak of “PPP fraud,” they are not referring to a particular federal criminal statute called “PPP fraud.” Rather, PPP fraud cases are federal because they involve conduct that constitutes federal criminal offenses or civil violations in matters that involve the use of federal funds. For example, when federal prosecutors pursue criminal enforcement in Delaware PPP loan fraud cases, they commonly charge the defendants under 18 U.S.C. § 1343, the federal wire fraud statute. They may pursue PPP fraud matters criminally under federal criminal statutes or civilly under the False Claims Act, and federal agencies such as the U.S. Department of Justice (DOJ), the U.S. Attorney’s Office, the Department of Labor, and the Small Business Administration’s Office of Inspector General (SBA OIG) may investigate, refer, or assist in enforcement efforts.

When prosecuting PPP fraud in Delaware, the U.S. District Court for the District of Delaware is the trial court. Because of this, PPP cases in Delaware ordinarily involve the prosecution of federal rather than Delaware state criminal statutes, although other state and local criminal statutes can apply as well. The scope of possible charges in PPP fraud cases is extremely broad, and the specific charges that apply in any individual case depends on a variety of different factors. These are the types of factors that our lawyers investigate immediately upon being retained, and we rely on our knowledge of these factors to provide the most effective defense possible for our clients.

At Spodek Law Group, we rely on our in-depth knowledge of these factors to develop customized defenses for our clients. If you are in need of a Delaware PPP fraud lawyer, then our lawyers at Spodek Law Group can help. Contact us to speak with a dedicated PPP fraud lawyer about your case, and find out how we can assist you in your defense.

Which PPP Eligibility and Payroll Facts Can Distinguish Fraud from Mistake?

Under the rules that governed the program, PPP loan funds were generally used to cover:

• Payroll;
• Rent;
• Mortgage interest; and,
• Utilities.

At least 60 percent of all amounts sought for PPP loan forgiveness were required to be used to cover payroll costs. This requirement applied even in situations where the business’s primary employees were the business owners and their family members, and businesses that were entirely or even partially owned by individual owners could qualify as “sole proprietorships,” and “self-employed individuals,” and “independent contractors” could qualify as eligible applicants as well.

The requirements for determining eligible applicants also included some special rules for certain businesses. For example, hospitality businesses could qualify as PPP applicants if they employed not more than 500 employees per physical location. Similar to this provision for hospitality businesses, other businesses that are owned by the same owner could qualify as separate PPP applicants under certain circumstances as well. However, the SBA also promulgated affiliation rules which can combine related businesses for the purposes of measuring a PPP applicant’s size. In many cases, businesses that meet the SBA’s affiliation definition will be considered an integrated part of a single entity, regardless of whether the entities are wholly owned by the same individual or other entity, or if separate entities are affiliated under the de facto control test.

The SBA’s affiliation analysis focuses substantially on ownership, management, and control relationships between the entities involved. As a result, to distinguish fraud from mistake, it is important to first determine whether the entities in question are “affiliated” entities for purposes of the PPP program. If a business is affiliated, the owner or owners may be held liable if they are unable to comply with the PPP program’s eligibility requirements or for fraudulent conduct related to the PPP loan application.

Spodek Law Group’s legal team will gather evidence of affiliation in order to provide advice regarding the issues involved.

Our legal team also conducts internal investigations to look for evidence that can bolster our clients’ defenses against the government’s allegations. If you have a business, then you should look for evidence that supports your company’s ability to meet PPP loan eligibility requirements, and your company should also examine its payroll records to determine if sufficient employee-related expenses were paid during the pandemic to satisfy the government’s 60 percent payroll expense requirement.

Todd Spodek represented the juror at the centre of the challenge to the Ghislaine Maxwell verdict.

What Federal Charges and Penalties Can Follow a Delaware PPP Allegation?

We discussed the federal charges that the government typically pursues in cases of Delaware PPP loan fraud. However, for more specific information about these charges, we believe that the following is relevant:

• Wire Fraud, The government most commonly pursues fraud allegations as wire fraud under 18 U.S.C. § 1343, which prohibits using “wire, radio, or television communication in interstate or foreign commerce” to facilitate a “scheme or artifice to defraud, or for obtaining, by means of false or fraudulent pretenses, representations, or promises, any of the money or property, in any case, lying within the jurisdiction of the United States.” In the federal criminal justice system, convictions for wire fraud generally carry up to a twenty-year maximum prison term.
• Bank Fraud and Other Offenses, Other federal criminal charges related to PPP fraud are more likely to follow if the government’s investigation uncovers the alleged fraudulent use of the funds. For example, 18 U.S.C. § 1344 criminalizes knowingly executing a scheme to defraud any federally insured depository institution, and a violation of this provision can carry up to thirty years of imprisonment. 18 U.S.C. § 1014 criminalizes knowingly making a false statement to any federally insured depository institution as well, and a conviction for making a false statement can carry up to thirty years of imprisonment as well.
• False Statements, The most commonly pursued charges in PPP loan cases aside from wire fraud are those relating to the False Claims Act and 18 U.S.C. § 1001, the federal criminal statute that prohibits “knowingly and willfully making a materially false, fictitious, or fraudulent statement or representation in a matter within the jurisdiction of the executive, legislative, or judicial branch of the U.S. Government” The government often pursues civil False Claims Act claims even when the alleged fraud was not committed against a private bank, and even when there is no evidence of the use of electronic communication systems.
• Aggravated Identity Theft, The federal government can also pursue charges for aggravated identity theft under 18 U.S.C. § 1028A. Notably, under this provision, an aggravated identity theft charge carries a two-year mandatory minimum sentence that must be imposed after a defendant’s sentence for another applicable criminal offense.

How Do the Government’s PPP Fraud Investigation Efforts Relate to Your Case?

The government’s efforts to investigate and prosecute fraud involving PPP loans can range from the filing of charges against a particular business owner or individual based on evidence gathered during the government’s review of loan applications and forgiveness requests to broad-based allegations of fraud that could expose multiple individuals to federal criminal liability. If you are under investigation, then it is imperative that you engage an experienced federal criminal defense attorney to protect your rights while the investigation progresses.

How Do Delaware PPP Investigations Move from Records to Criminal or Civil Action?

Whether a case is civil or criminal depends on a variety of different factors. If the government determines that civil enforcement action is warranted under the False Claims Act, the government can seek damages and civil penalties that are multiple times the amount allegedly obtained through fraud. According to the False Claims Act, specifically, “Whoever knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval to any department or agency of the United States... Or knowingly makes or uses a false record or statement material to a false or fraudulent claim, shall be liable to the United States Government for a civil penalty imposed by the court.... The court shall also impose treble damages....”

If federal prosecutors decide to pursue criminal charges, they must prove the charged offenses beyond a reasonable doubt, including any required knowledge or intent. To this end, the government can take action against an individual who knowingly and intentionally presents, or causes to be presented, false or fraudulent information to the U.S. Small Business Administration (SBA) or another federal agency. This is one way to pursue criminal penalties for PPP fraud.

Regardless of the specific allegations at hand, investigations that include the review of PPP records typically begin with an investigation into specific documents and records. These documents and records include the information provided on the business’s PPP application, the business’s PPP loan forgiveness application or certification, and other documents like payroll records, tax records, and bank records. As a result, PPP fraud investigations typically focus on one of the following allegations:

• The business or business owner lied on the business’s PPP application or certification by listing nonexistent employees.
• The business or business owner inflated the amount of the business’s payroll expenses;
• The business or business owner used the business’s loan proceeds for purposes not covered under the program;
• The business or business owner knowingly received multiple PPP loans without satisfying the program’s requirements for each loan; and,
• The business owner misused the PPP funds for personal use.
• You may be a “whistleblower” who is aware of or has knowledge of, some form of PPP fraud and wish to learn more about the potential rewards for exposing wrongdoing.

How Can You Tell If the Government Is Pursuing Your PPP Loan Case Criminally?

Calling About Someone You Love

Most first calls to a defense firm come from a family member rather than the person under investigation. If that is you, Spodek Law Group answers its phone at any hour, and families retain the firm on a relative's behalf every week. Reach it at 888 348 8028.