False Statements to Financial Institutions (18 USC 1014): PPP Defense Guide

Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek, with over 40 years of combined experience in federal criminal defense. If you’re facing charges under 18 USC 1014 for false statements in connection with your PPP loan, you’re looking at up to 30 years in federal prison – but this statute also has specific defenses that can result in acquittal, and recent Supreme Court rulings have strengthened those defenses.

This article explains what 18 USC 1014 prohibits, how prosecutors use it in PPP fraud cases, and what defenses work.

What 18 USC 1014 Prohibits

The statute makes it a federal crime to knowingly make false statements or reports to a financial institution in connection with a loan application. In PPP fraud cases, your lender is a financial institution – whether it’s a bank, credit union, or online lender.

False statements include inflated employee counts, exaggerated payroll costs, backdated business formation documents, fake tax returns, or any other misrepresentation in your PPP loan application.

The statute carries harsh penalties: up to 30 years in federal prison per count, and fines up to $1,000,000 per count. Unlike some fraud statutes that require proof of actual loss, 18 USC 1014 doesn’t – you can be convicted even if the lender never disbursed the loan.

Elements Prosecutors Must Prove

To convict you under 18 USC 1014, prosecutors must prove three elements beyond a reasonable doubt. First, you made a false statement or report to a financial institution. Second, the statement was made in connection with a loan application. Third, you made the statement knowingly.

“Knowingly” is the critical element. Prosecutors must prove you knew the statement was false when you made it. Honest mistakes aren’t crimes. If you miscalculated your payroll costs, if you misunderstood eligibility requirements, if you relied on incorrect information from your accountant – those aren’t knowing false statements.

The Thompson v. United States Defense

In 2025, the Supreme Court issued a significant ruling in Thompson v. United States that strengthens defenses under 18 USC 1014. The Court held unanimously that the statute doesn’t criminalize misleading yet literally true statements.

This means if your PPP application statements were factually correct – even if they were incomplete or presented information in a misleading way – you can’t be convicted under 18 USC 1014. Prosecutors must prove your statements were actually false, not merely misleading.

Take an example. Your PPP application listed 10 employees. That number was correct – you did have 10 employees. But five of them only worked part-time, and your payroll costs were much lower than the application suggested. Under Thompson, if the employee count itself was literally true, prosecutors can’t convict you under 18 USC 1014 based on that statement alone.

At Spodek Law Group, we use the Thompson decision aggressively. We analyze every statement in your PPP application to determine if it was literally true. If prosecutors are relying on allegedly “misleading” statements that were factually correct, we move to dismiss the charges.

The Materiality Defense

False statements must be material – meaning they had the potential to influence the lender’s decision to approve your loan. If a statement was false but didn’t affect the lending decision, it’s not criminal under 18 USC 1014.

In PPP loan cases, many lenders approved applications with minimal review. They relied on self-certifications and didn’t verify information before disbursing funds. If your lender would have approved your loan regardless of the false statement, that statement wasn’t material.

We challenge materiality by demonstrating that lenders approved PPP loans based on limited criteria – business existence, basic eligibility requirements – without scrutinizing the specific numbers you provided. If the lender didn’t actually rely on your payroll calculations or employee counts, those statements weren’t material to their decision.

The Good Faith Defense

You can’t be convicted if you had a good faith belief that your statements were accurate. Good faith means you honestly believed the information in your PPP application was true, even if it turned out to be wrong.

If you relied on advice from an accountant who told you how to calculate payroll costs, and you followed that advice in good faith, you didn’t knowingly make false statements. If you consulted the SBA’s guidance documents and interpreted them in a way that supported your loan application, that’s good faith – even if your interpretation was wrong.

We present evidence of your good faith through communications with professionals, documentation showing you sought guidance, and testimony demonstrating you had reasonable grounds to believe your application was accurate.

Challenging Intent

Prosecutors must prove you acted with intent to deceive the financial institution. If discrepancies in your application resulted from confusion, miscommunication, or misunderstanding of PPP rules, you didn’t have intent to deceive.

The PPP program was implemented quickly during a crisis. Eligibility rules were complex and changed frequently. Guidance from the SBA was sometimes unclear or contradictory. We use this context to demonstrate that errors in your application resulted from the chaotic circumstances, not fraudulent intent.

Alternative Charges Prosecutors Use

Even if we successfully defend against 18 USC 1014 charges, prosecutors might pursue alternative charges. Wire fraud carries 20 years but doesn’t require proving false statements to a financial institution – just use of electronic communications in a fraud scheme. Bank fraud carries 30 years and covers broader conduct than 18 USC 1014.

Our defense strategy addresses all potential charges. We challenge the evidence holistically – showing not just that your statements were literally true or immaterial, but that you lacked criminal intent and acted in good faith throughout the PPP application process.

Sentencing Considerations Under 18 USC 1014

If convicted, your sentence depends on federal guidelines that calculate prison time based on loss amount. The “loss” is the amount of money you fraudulently obtained or attempted to obtain.

We challenge loss calculations by demonstrating that you qualified for part of the loan based on legitimate payroll. If prosecutors claim $500,000 in losses but you actually qualified for $300,000, the loss is only $200,000 – which significantly reduces your sentencing range.

We also present mitigation evidence: first-time offender status, family responsibilities, genuine remorse, efforts to make restitution. We argue for alternatives to incarceration when appropriate – home detention, probation, community service.

Why You Need Spodek Law Group

We defend clients facing 18 USC 1014 charges in PPP fraud cases nationwide. Todd Spodek is a second-generation criminal defense attorney who has handled hundreds of federal cases. We represented Anna Delvey in the case that became a Netflix series.

Our team includes former federal prosecutors who understand how the DOJ builds false statement cases. We know the elements they must prove, the defenses that work, and how to use recent Supreme Court rulings like Thompson v. United States to your advantage.

If you’re facing charges under 18 USC 1014, if you’re under investigation, or if you’ve received a target letter or grand jury subpoena – contact us immediately. We’re available 24/7. False statement charges are serious, but they’re also defensible with the right legal strategy and aggressive representation. Don’t face federal prosecutors alone – your freedom depends on the defense you build right now.