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PPP Fraud Defense Lawyers

June 21, 2020 Federal Criminal Attorneys

Are you being accused of SBA Fraud / PPP Loan Fraud?

Our PPP loan fraud defense lawyers are here to help you. Your company could be prosecuted for Pay Check Protection fraud.

In March 2020, the CARES act was passed and intended to provide benefits to companies impacted by COVID-19. One of the main components of this act was the PPP program. With over $300 billion in funds, the PPP was made to provide financial relief to small and medium sized businesses facing financial losses due to the impact of COVID-19. Despite the sheer size of the endowment, the PPP program ran out of funds in days. Lenders were flooded with applications, and many companies couldn’t get funded at all. Any time a federal program offers financial relief, there are questions raised about who got the funds. Due to the nature of PPP, and the rate at which it was depleted, many companies who have received PPP should expect scrutiny from authorities.

Potential Fraud Concerns Surrounding PPP

Due to concerns about fraud, and other lessons learned, the OCC is working with lenders to improve future programs and address issues that arose from PPP. Fraud is one of the biggest issues of increased focus, given the nature of the PPP rollout, and the fact that many federal relief programs have seen fraudsters try to take advantage of it.

There are many fraud concerns related to PPP,  and the US Treasury Department may be looking to identify companies that illegally received PPP funds. For these companies, the risk of prosecution is very high because of the public outcry. Due to the depletion of PPP, there’s a lot of widespread publicity that small businesses didn’t get the funds they needed.

As a result, federal prosecutors will be focusing on PPP fraud in order to impose a sense of justice and chaos. It might be wise to employ federal lawyers who can help mitigate the risk of substantial penalties you might encounter.

What constitutes PPP loan fraud?

Like other federal programs, there are many acts, and omissions, which have the potential to lead to fraud allegations with the Paycheck Protection Program. Below are examples of situations which could lead to possible allegations of PPP Fraud.

Application Fraud

The PPP contained many eligibility criteria. Companies which lied on their application in order to fraudulent get funding could face prosecution.

  • This means misrepresenting the number of employees you have,
  • misclassifying independent contractors as employees,
  • misclassifying employees as independent contractors in order to fall below the 500 employee threshold,
  • misrepresenting the company’s payroll costs in order to increase the loan amount

Multiple PPP Loans 

This is known as “loan stacking,” which is when you get PPP loans for multiple lenders. The OOC has mentioned they will be focusing specifically on THIS TYPE of PPP Fraud. The government has the capability of tracking all funds distributed from the PPP, and companies which received money for PPP from more than one lender will be EASY TARGETS for investigations.

Fraud Loan Certifications

PPP applicants were required to attest to certain facts. The certifications were supposed to be made in good faith. If you’re caught lying, it could lead to potential fraud charges.

  • There is economic uncertainty which makes the loan necessary to support your business
  • The funds will be used to retain workers, maintain payroll, and make mortgage/lease/utility payments
  • You have not, and will not, get another loan under PPP
  • All information, and supporting documents, are true and accurate

You will not use PPP For ineligible business purposes

Companies which got funds through PPP are restricted to using those funds for specific purposes like:

  1. Covering payroll costs
  2. Paying interest on mortgage
  3. Pay rent
  4. Pay for utilities

PPP funds should only be used to cover your expenses for obligations that existed before Feb 15, 2020. If you use PPP funds for any purpose that is not allowed has the potential to lead to allegations of fraud. Companies which got PPP funds must document the payment of eligible and non-eligible expenses so they can show compliance in the event they get audited or investigated.

Don’t use PPP for Fraud Purposes

There is no personal guarantee for the PPP. If you use the PPP funds for fraudulent intentions, then it’s likely the Government will pursue criminal charges against you. The PPP is unique because companies and individuals who are personally involved can be prosecuted. According to the False Claims Act, individuals can face thousands in fines, and years of federal imprisonment, for fraudulently obtaining funds from the PPP.

Fraud Loan Forgiveness Certification

The PPP program has a 1% interest rate. Many companies will be eligible for loan forgiveness. In order to qualify for this, you have to provide documentation that you met the criteria for PPP funds.

What to do if targeted for PPP loan fraud?

If you/your company is targeted for SBA loan fraud, the first thing you should do is hire federal counsel right away. This is a VERY IMPORTANT issue. You will need the help of experience attorneys who understand federal investigations – how they proceed, and how to handle them. Our federal criminal lawyers can help you in a broad array of issues related to federal audits and investigations.

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