Denver PPP – SBA – EIDL Loan Fraud Lawyers

Denver PPP – SBA – EIDL Loan Fraud Lawyers

Let me start by saying, as a lawyer here in Denver, I’ve seen a whole lot of clients dealing with accusations of fraud related to PPP, SBA, and EIDL loans these past few years. It’s definitely a complicated area of law, and if you don’t have a good legal team helping you out, the consequences can be really severe. In this article, I want to break down some of the key issues and potential defenses, so you understand what you’re up against if accused of defrauding one of these COVID relief programs.

First things first, let’s look at what exactly constitutes fraud with these PPP, SBA and EIDL loans. Basically, if you make any false or misleading statements on your application in order to get approved or to get more money than you should, that can be considered fraud. Some common examples I’ve seen are: lying about your business’ number of employees or payroll expenses so you can get a larger loan amount; using PPP funds for non-allowable expenses like personal purchases instead of payroll and other operating costs for your business; applying for multiple PPP loans for the same business through different lenders; and continuing to claim Economic Injury Disaster Loan advances as payroll expenses after you already got PPP loan forgiveness.

The legal implications are no joke if you’re charged with defrauding these federal programs. You could be looking at felony fraud charges at both the state and federal level, including things like wire fraud, bank fraud, making false statements, theft, identity theft, money laundering, and criminal tax violations. The penalties can include massive fines and years in prison if convicted. For example, federal bank fraud over $1 million can mean up to 30 years behind bars and a $1 million fine. Even “smaller” PPP fraud can still result in 5-10 years in prison. Having to pay back the money (aka restitution) is also common, so you may have to repay the full loan amount plus interest and fees. And on top of the criminal penalties, you’re very likely to face civil lawsuits from the SBA and your lender as they try to recoup the funds. Your business’ reputation will surely suffer too.

So if you find yourself being investigated for potential PPP, SBA or EIDL fraud, it is absolutely essential to get an experienced legal team on your side right away. A skilled federal defense lawyer can analyze the specifics of your case and put together a strong defense strategy. Here are some of the most common arguments we look at:

Lack of intent – For most fraud charges, prosecutors have to be able to prove you knowingly and intentionally deceived the lender or SBA. If there were simple mistakes or misunderstandings involved, you may be able to show there was no real intent to defraud. Poor recordkeeping or sloppy bookkeeping is pretty common with small businesses and doesn’t necessarily mean there was fraud happening.

No material falsehoods – What if the alleged “lies” on your application didn’t actually help you get the loan or a larger amount? Minor errors that don’t change the outcome could potentially fall short of actual fraud. For example, if you slightly misstated revenue but still qualified for the same loan amount anyway.

Repaid funds – If you’ve paid back the loan already, that can help show your good faith and potentially reduce penalties. Courts may see it as you trying to right your wrongs.

Reliance on professionals – Many business owners reasonably relied on CPAs, bankers and attorneys to handle PPP applications accurately for them. You may be able to argue any issues were due to poor advice rather than you intentionally trying to deceive anyone.

Selective enforcement – Unfortunately, these COVID relief programs were rushed out with very little oversight. Inconsistency in standards and huge backlogs means enforcement can seem arbitrary sometimes. If you’re being singled out despite many others doing the same thing, it raises questions of fairness.

Free speech – When applying for loans, you have 1st Amendment rights that may provide certain protections for statements made.

Statute of limitations – For federal charges, you generally have 5 years for most fraud crimes. Any delays in investigating or charging you could potentially impact statutes of limitations.

Sentencing entrapment – This refers to situations where the government contributes to inflated losses, then uses that to push for harsher sentences. We scrutinize their loss calculations very closely.

In addition to fighting the actual charges, an experienced federal criminal defense lawyer will also advocate for your rights and best interests throughout the whole process. We can get involved early and try to prevent any charges from being filed in the first place. Once charged, we’ll handle all interactions with investigators and prosecutors, challenge any violations of due process or procedure, negotiate plea deals if appropriate, and take your case to trial if needed.

I also recommend taking prompt action on the civil side to get ahead of any lawsuits over loan repayment and put yourself in the best position possible there. That means consulting with business attorneys and financial experts to figure out what you realistically owe, negotiate repayment plans, and protect your assets. You may also need to consider bankruptcy or winding down your operations. It’s a lot to deal with, which is why having the right legal team is so crucial.

I hope this overview gives you a better understanding of the relevant laws and potential defenses if you find yourself under investigation for PPP, SBA or EIDL fraud. Feel free to reach out for a free case evaluation if you need guidance responding to any inquiries, audits, charges or lawsuits related to COVID relief loans. An experienced federal criminal defense lawyer can thoroughly analyze your unique situation and build a comprehensive defense strategy. Don’t wait to get experienced legal help on your side.