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You think the danger is the PPP fraud you committed. The inflated payroll numbers. The fake employees. The money you spent on things the program didn’t cover. That’s not the danger. The danger is the FBI interview you’re about to have. The knock on your door. The phone call asking you to “come in and clear things up.” The friendly agent who just wants to “get your side of the story.” That conversation – not the fraud – is where most people create their federal conviction.
Welcome to Spodek Law Group. Our goal is to explain the charge that prosecutors use when they can’t prove the underlying crime: 18 USC 1001, the false statements statute. Martha Stewart didn’t go to prison for insider trading – prosecutors never proved she traded on inside information. She went to prison for lying about it during the investigation. Michael Flynn didn’t go to prison for anything involving Russia – he pleaded guilty to making false statements to FBI agents. Rod Blagojevich. Scooter Libby. The pattern repeats across decades of federal prosecution: the lie during the investigation becomes the conviction when the underlying crime can’t be proven.
That’s the revelation that changes everything about how you should handle contact from federal investigators. The interview IS the trap. Justice Ginsburg warned about this exact mechanism in her concurrence in Brogan v. United States: “The prospect remains that an overzealous prosecutor or investigator – aware that a person has committed some suspicious acts, but unable to make a criminal case – will create a crime by surprising the subject, asking about those acts, and receiving a false denial.” The investigation creates a NEW federal crime. And you’re walking into it.
Heres how the trap works. FBI agents contact you about your PPP loan. There friendly. There professional. They say they just want to ask a few questions. Maybe they can clear this up without any problems. You want to be cooperative. You want to seem innocent. You agree to talk.
The moment you make a statement thats not entirely accurate – even if you dont realize its inaccurate – youve potentially commited a new federal crime under 18 USC 1001. The statute criminalizes “knowingly and willfully” making “any materially false, fictitious, or fraudulent statement” to a federal agent. Maximum penalty: 5 years in federal prison plus fines up to $250,000.
Prosecutors call these “process crimes” – crimes that occur during the investigative process rather then the underlying conduct being investigated. The term makes them sound minor. There not. Martha Stewart served 5 months in federal prison for a process crime. The lie becomes the conviction.
When FBI agents contact you about a PPP loan, they are not trying to “clear things up” – they are creating an opportunity for you to commit a new federal crime under 18 USC 1001.
And heres what makes the trap particulary dangerous. The agents dont need to prove you intended to lie. They need to prove you made a statement, the statement was false, and the statement was material to there investigation. “All you have to prove is that they lied to a federal agent about a material matter,” white collar defense attorney Solomon Wisenberg explains. “It doesn’t have to be under oath.”
The underlying PPP fraud might be difficult to prove. Prosecutors would need to establish your intent, prove you knew the statements were false, overcome any Thompson defense arguments about misleading-versus-false statements. But the lie you tell during the interview? Thats provable. The agent’s notes will document exactly what you said. Your statement either matched the documents or it didnt. The discrepancy becomes the evidence.
Lets talk about the case that everyone facing federal investigation needs to understand. Martha Stewart was investigated for insider trading after she sold stock in ImClone Systems just before negative FDA news sent the price crashing. Prosecutors suspected she had recieved an illegal tip from her broker about the ImClone family selling there shares.
Proving insider trading is difficult. You need to show the defendant recieved material nonpublic information and traded on it knowingly. The evidence against Stewart wasnt strong enough to guarentee conviction on the securities charges. Prosecutors couldnt prove the underlying crime.
What they could prove was that Stewart lied during there investigation. She told investigators there was a pre-existing agreement to sell when the stock fell to $60 – but this agreement didnt exist. She claimed she didnt recall her broker’s message about the ImClone family selling – but phone records showed she recieved and returned the call. These false statements – not the insider trading – became the basis for her conviction.
Martha Stewart had lawyers present during her FBI and SEC interviews. She still lied. She served five months in federal prison, not for trading on inside information, but for what she said when investigators asked about it.
The pattern repeats:
Michael Flynn: Pleaded guilty to 18 USC 1001 for making false statements to FBI agents about his conversations with the Russian ambassador. He wasn’t convicted of anything involving Russia. He was convicted of the lie.
Scooter Libby: Convicted of perjury and making false statements during the investigation into who leaked a CIA operative’s identity. The underlying leak was never successfully prosecuted.
Rod Blagojevich: His convictions included making false statements during the investigation, not just the underlying corruption allegations.
The Martha Stewart pattern is this: when prosecutors cant prove the original crime, they often can prove you lied about it. And even if you didn’t commit the underlying crime, you can still go to prison for lying during the investigation.
OK so heres the distinction that most people dont understand. There are two separate false statement statutes that apply to PPP fraud cases, and they cover completely different conduct.
18 USC 1014 covers false statements made TO the SBA or financial institutions – the lies on your PPP application. Maximum penalty: 30 years. This is the statute that criminalizes inflating payroll numbers, claiming employees you didnt have, or misrepresenting your business operations on the loan application itself.
18 USC 1001 covers false statements made to federal agents during investigation – the lies you tell FBI agents, IRS agents, or SBA-OIG investigators when they come asking questions. Maximum penalty: 5 years. This is the statute that creates the interview trap.
The critical distinction is WHEN the lie occured:
But heres were it gets dangerous. Prosecutors can charge BOTH. If you lied on your PPP application (1014) AND then lied to investigators about those lies (1001), you face stacked exposure. The 30-year exposure for the application lies plus the 5-year exposure for the interview lies. Teldrin Foster received 10 years and 1 month for PPP fraud that included 6 counts of making false statements to a federally insured financial institution.
Todd Spodek has represented clients facing both types of charges. The 1014 charges for application fraud are often defensible – Thompson v. United States, knowledge requirements, materiality issues. The 1001 charges for interview lies are much harder to defend becuase the agent’s notes document exactly what you said.
The paradox is this: your PPP fraud might be unprovable. But the lies you tell trying to explain that fraud are almost always provable. The investigation creates new crimes that are easier to prosecute then the original conduct.
Heres the system revelation that makes 1001 charges particularly dangerous. FBI interviews are not recorded. Agents take notes during the conversation, then write up there recollections in a document called a Form 302 – sometimes hours or days after the interview.
That Form 302 becomes the official record of what you said. If the agent’s 302 says you denied having employees, thats what you said according to the government. If the 302 says you claimed your business was operational when you applied, thats the statement prosecutors will use against you. Your memory of the conversation versus the agent’s contemporaneous notes – the agent almost always wins.
The 302 problem creates several traps:
Memory disputes: You remember saying “I think I had about 5 employees” – the 302 records you as saying “I had 5 employees.” That subtle difference – the qualifier you remember including – might not appear in the agent’s notes.
Context stripping: The 302 records your statement without the qualifiers, hesitations, or context that might have made the statement defensible. What felt like a nuanced response becomes a flat assertion in the report.
Selective documentation: Agents decide what to include in the 302. Exculpatory context – your confusion, your attempts to clarify, your expressed uncertainty – might not make it into the report.
Time delay: The 302 might be written hours or days after the interview. The agent’s recollection of exactly what you said may differ from what actually occured. But there notes are “contemporaneous” and yours are not.
At Spodek Law Group, we advise clients that anything you say will be documented, and the documentation may not match your recollection. The only way to control the record is to have your own counsel present, taking there own notes, or to decline the interview entirely.
Theres a deeper problem with the 302 system that few defendants understand until its to late. The 302 is not a transcript. Its not even a summary. Its the agent’s interpretation of what you said, filtered through there understanding of the case and there training to identify criminal admissions. The agent who writes the 302 is the same agent who suspects you of fraud. There documentation reflects that perspective.
Defense attorneys have challenged 302 accuracy for decades. The FBI has resisted recording interviews despite technological advances that make recording trivial. The result is a system that consistently favors prosecution. Your words become the agent’s words in a document you never see until discovery – by which point the 302 has already been used to build the case against you.
Theres a myth that certain phrases protect you during federal interviews. “I don’t recall.” “To the best of my recollection.” “I’m not sure.” People beleive these qualifiers create safety. They dont.
The Supreme Court rejected the “exculpatory no” doctrine in Brogan v. United States. Previously, some courts held that simply saying “no” to deny guilt wasn’t a false statement under 1001. The Supreme Court disagreed. A false denial is still a false statement, even if its just the word “no.”
“I don’t recall” is particularly dangerous when documents prove you should recall. If theres an email you sent, a document you signed, a transaction you approved – claiming you dont recall can be proven false by the documentary evidence. The “I dont recall” defense works only when theres genuinely no way to prove you should remember.
“To the best of my recollection” dosent protect you if prosecutors can show your recollection was false. If you say “to the best of my recollection, I had 10 employees” and records show you had 2, the qualifier dosent eliminate the false statement. It might actualy make things worse by showing you were trying to create wiggle room.
The safest phrase in any federal interview is: “I need to consult with my attorney before answering any questions.”
Heres what happens when you try to be “helpful” during the interview. You provide partial information. You explain some things but not others. You try to minimize your involvement. The agent notes exactly what you said – and what you didnt say. Later, when documents reveal the full picture, your partial statements look like deliberate omissions. The attempt to be helpful becomes evidence of consciousness of guilt.
The only safe response to federal investigators asking about PPP fraud is silence until you have counsel present. Everything else creates risk.
Theres another dangerous pattern that defendants fall into: the “clarification call.” After the initial interview, you realize you said something wrong. You call the agent back to correct it. Each correction is a new statement. Each new statement is a new opportunity for 1001 exposure. And the correction itself might be inaccurate – now you have two false statements instead of one.
The urge to fix your mistakes is natural. But in a federal investigation, every communication without counsel is a landmine. The agent who takes your clarification call is not your friend. They’re documenting your changing story, looking for inconsistencies, building a case that you consciously lied and then tried to cover it up. The correction call almost always makes things worse.
Heres the inversion that surprises most people. Cooperating with federal investigators – without counsel – almost always INCREASES your criminal exposure rather then decreasing it.
You think: if I cooperate, they’ll see I have nothing to hide. If I’m helpful, they go easy on me. If I explain my side, they understand.
Heres what actually happens: you make statements. Some of those statements are inaccurate – maybe intentionally, maybe just from faulty memory or nervousness. The agent documents the inaccuracies. Prosecutors now have 1001 exposure to add to whatever other charges they were considering. Your “cooperation” created a new federal crime.
Todd Spodek has represented clients who called investigators back without counsel, trying to “clarify” earlier statements. Each call created additional 1001 exposure. Each attempt to explain made things worse. The cooperation instinct – the desire to seem innocent by being helpful – is exactly what prosecutors exploit.
The mathematics of cooperation without counsel:
The ONLY cooperation that helps is cooperation through experienced federal defense counsel who can structure the disclosure, document the process, and protect you from creating additional exposure.
Consider what proper cooperation looks like. Your attorney contacts the prosecutor’s office. Your attorney explains that you want to cooperate, but only through counsel. Your attorney negotiates the terms of any proffer – including queen-for-a-day protections that limit how your statements can be used. Your attorney prepares you for what questions will be asked. Your attorney is present during the proffer session, taking notes, making objections, and ensuring the record accurately reflects what you said.
Thats cooperation that can actually help your case. It shows prosecutors your willing to provide information while protecting yourself from the 1001 trap. It creates a documented record that cant be disputed later. It demonstrates that your taking the investigation seriously without creating additional criminal exposure.
The difference between cooperative defendants who get favorable outcomes and cooperative defendants who get additional charges is almost always whether counsel was involved from the beginning. The instinct to talk, to explain, to be helpful – thats what prosecutors count on. Smart cooperation requires professional guidance.
At Spodek Law Group, we coordinate client cooperation in a way that provides value to prosecutors while protecting the client from 1001 exposure. Thats the only safe path to cooperation credit.
Everything above leads to this practical question: when federal investigators contact you about your PPP loan, what should you do?
Step 1: Say Nothing Substantive
The moment investigators identify themselves, your only response should be: “I need to speak with my attorney before answering any questions.” This is your Fifth Amendment right. It cannot be used against you. It stops the interview before you create 1001 exposure.
Step 2: Get Contact Information
Ask for the agent’s name, badge number, and contact information. Ask which agency theyre from – FBI, IRS-CI, SBA-OIG, Secret Service. Ask if you’re the target of an investigation or a witness. Write this down. Then repeat that you need to consult with an attorney.
Step 3: Do Not Explain or Clarify
The agent will try to get you talking. “We just have a few questions.” “This will only take a minute.” “You can clear this up right now.” Every one of these invitations is an opportunity for you to commit a federal crime. Decline politely but firmly.
Step 4: Contact Counsel Immediately
The window for defense strategy is before charges, not after. What you do in the hours after investigator contact can determine whether charges are filed, what charges appear, and whether you have any defense to 1001 exposure.
Step 5: Understand the Timeline
The statute of limitations was extended to 10 years for pandemic fraud. If you took a PPP loan in 2020 or 2021, federal prosecutors have until 2030 or 2031 to bring charges. The fact that nothing has happened in four years dosent mean your safe. But it does mean you have time to prepare a defense strategy before investigators arrive.
Step 6: Evaluate Your Exposure
Both 1014 (application lies) and 1001 (investigation lies) require knowledge that your statements were false. If you genuinely beleived your PPP application was accurate – based on accountant advice, SBA guidance interpretation, or reasonable misunderstanding of program rules – that lack of knowledge is a defense to both charges.
Step 7: Consider the Full Picture
18 USC 1001 carries 5 years maximum. 18 USC 1014 carries 30 years maximum. Money laundering adds 10-20 years per transaction. Wire fraud adds 20-30 years. The interview trap is dangerous, but its only one part of the exposure picture. A comprehensive defense strategy addresses all potential charges, not just the process crime risk.
Call Spodek Law Group at 212-300-5196 for a consultation. The call is free. The mistake of talking to federal investigators without counsel – creating 1001 exposure that might not otherwise exist – is measured in years of your life.
The false statements trap under 18 USC 1001 isnt about the fraud you commited. Its about what you say when they come asking about it. Martha Stewart learned this. Michael Flynn learned this. The interview IS the trap. Your only protection is silence until you have experienced federal defense counsel at your side. Everything else is walking into the trap with your eyes open.
Sources:
Very diligent, organized associates; got my case dismissed. Hard working attorneys who can put up with your anxiousness. I was accused of robbing a gemstone dealer. Definitely A law group that lays out all possible options and best alternative routes. Recommended for sure.
- ROBIN, GUN CHARGES ROBIN
NJ CRIMINAL DEFENSE ATTORNEYS