NYC PPP Loan Fraud Lawyers

NYC PPP Loan Fraud Lawyers

Welcome to Spodek Law Group. Our goal is to give you the information you need to understand what your facing if your under investigation for PPP loan fraud in New York City. This isnt a simple legal problem with a simple solution. Federal prosecutors have made pandemic relief fraud a priority, and the consequences of getting this wrong are devastating.

If your reading this, you probably took a PPP loan during COVID and something has gone sideways. Maybe the FBI showed up. Maybe you got a subpoena from the SBA Office of Inspector General. Maybe your bank called with questions about your forgiveness application. Whatever triggered your search, you need to understand something most lawyers wont tell you: the timing of your case matters more than what you actually did.

Defendants sentenced in 2024 and 2025 receive prison terms 40% longer on average than defendants sentenced in 2021 and 2022 for the exact same conduct. Same fraud amount. Same guidelines calculation. Same judge in some cases. The only difference is when the gavel came down. Thats the reality of PPP fraud defense in New York City right now.

The Forgiveness Letter Means Nothing

Heres the kicker – your PPP loan forgiveness dosent protect you. At all. The SBA has flagged 37,938 previously forgiven loans totaling $4.6 billion for potential clawback. They call it “Hold Code 70” and its basicly a marker that says we forgave this loan but now we think something was wrong with it.

Think about that number. Almost 38,000 business owners who thought they were in the clear, who got there forgiveness letter and put this whole nightmare behind them, are now facing renewed scrutiny. The government can go back and retract forgiveness on a PPP loan that was previusly approved. They have the authority and there using it.

OK so you might be thinking – Ill just pay it back. Thats actualy one of the worst things you can do. The DOJ has literaly used voluntary repayment as “consciousness of guilt” evidence in prosecutions. The thing you think will save you becomes the thing that convicts you. Its completly counterintuitive but thats how federal prosecutors operate. If you werent guilty, why would you pay it back? Thats there argument.

This is why you need representation before you make any moves. Todd Spodek and the team at Spodek Law Group have seen clients who tried to fix the situation themselves and made everything worse. A quick phone call to a federal agent without counsel. A voluntary repayment that triggered investigation. An email to the bank that became exhibit A at trial.

SDNY is Different and Thats Not Good

Heres something your other lawyers probly wont tell you – venue matters enormusly in federal PPP fraud cases. The Southern District of New York, which covers Manhattan and the surrounding areas, is one of the most agressive districts in the country for these prosecutions. SDNY has an 88% indictment rate and prosecutors there prefer grand jury indictments even for cooperative defendants.

The same crime that gets you 12 months home confinement in Texas can get you 48 months in SDNY. Same facts. Same guidelines range. Completly different outcome. Your ZIP code is literaly determining your fate more then your conduct.

SDNY is known for harsh sentences in white-collar cases and PPP fraud is no exception. If your case is being investigated by federal agents in Manhattan, you need to assume your going to be indicted regardless of how cooperative you are. Thats not pessimism – thats the statistical reality of that courthouse.

Heres were it gets even more complicated. The federal government often has discretion about where to prosecute. If your fraud involved banks in multiple states or wire transfers that crossed jurisdictions, prosecutors can pick there venue. And if you live in NYC or the tristate area, they will almost always pick SDNY because its there home court.

The Intended Loss Trap

Most people dont understand how federal sentencing works for fraud cases. The guidelines use something called “intended loss” not actual loss. So if you applied for $200,000 in PPP loans but only recieved $50,000 before getting caught, the guidelines use the $200,000 figure.

Let that sink in. The money you never got counts against you at sentencing. Every fraudulent application you submitted – even the ones that got denied – gets added to your intended loss calculation. Prosecutors will comb threw every loan application you touched and add them all together.

The loss calculation drives everything in federal fraud sentencing. Heres how it works:

• Fraud under $6,500: Base offense level only
• Fraud over $15,000: Add 2 levels
• Fraud over $40,000: Add 4 levels
• Fraud over $95,000: Add 6 levels
• Fraud over $3.5 million: Add 18 levels
• Fraud over $9.5 million: Add 20 levels

Each 2-level increase translates to significently more prison time. And the increses accelerate as the numbers go up. Someone who applied for $500,000 across three applications is looking at a dramaticaly different sentence than someone who applied for $50,000 once – even if the actual conduct was simular.

Why Cooperation Dosent Always Help

People assume that if they cooperate with the government, theyll get credit at sentencing. Its not that simple. Even defendants who cooperate fully may have prosecutors refuse to file a 5K1.1 motion for sentence reduction. You give up your rights, you testify against others, you provide documents and information – and the prosecutor can still decide your assistance “wasnt valuable enough.”

In one case from 2024, the first defendant who proffered recieved 18 months. The third defendant who proffered later got 48 months. Same conduct. Same guidelines range. But the first cooperator provided information that led to charges against others, while the third cooperator was just confirming what the government allready knew.

Heres the uncomfortable truth: cooperation is a gamble where you give up everything upfront and hope the prosecutor rewards you later. There is no guarantee. The government is under no obligation to file a motion for reduced sentence just because you cooperated.

This is why having experienced federal defense counsel matters so much. An attorney who has worked with SDNY prosecutors before knows how to position your cooperation effectively. They know what information is valuable and what isnt. They know how to negotiate the cooperation agreement itself to protect your interests as much as possible.

The team at Spodek Law Group has handled federal cases involving cooperation agreements and understands the risks involved. Sometimes cooperation is the right move. Sometimes fighting the case is better. But that decision should never be made without understanding exacly what your giving up.

The 10-Year Clock is Running

One of the things that surprises people most is the statute of limitations for PPP fraud. Its 10 years. That means loans disbursed in April 2020 can be prosecuted until April 2030. The idea that you can just wait this out is mathematicaly impossible.

And heres the cruel irony – every year you wait, sentences get harsher. Remember that 40% increase in sentence length between 2021-2022 and 2024-2025? That trend is continuing. Judges are getting less sympathetic to PPP fraud defendants as time goes on, not more sympathetic.

The DOJs COVID-19 Fraud Enforcement Task Force has charged over 3,500 defendants with federal crimes related to pandemic relief fraud. Theyve recovered more than $1.4 billion in stolen funds. This is not winding down – its accelerating. The SBAs Office of Inspector General identified almost $200 billion in potentialy fraudulent PPP loans nationwide. There working threw that backlog systematicaly.

If your thinking about waiting to see if anything happens, understand that your gambling with your future. Every month that passes without resolution is a month where the government continues building cases, where sentences continue trending upward, and where your options continue narrowing.

What Actualy Gets People Caught

Most PPP fraud cases dont start with some dramatic investigation. They start with data matching. The government has sophisticated algorithms that compare PPP loan applications against tax records, business filings, and employment data. Discrepencies trigger automated flags.

Common triggers include:

• Employee counts on PPP application dont match IRS filings
• Business was formed after February 15, 2020 cutoff
• Multiple PPP loans from different lenders for same business
• Payroll expenses claimed exceed historical business revenue
• Same address or bank account used for multiple “separate” businesses

Once flagged, an investigator reviews the file. If it looks problematic, it gets referred to the appropriate agency. Depending on the dollar amount and complexity, that might be local FBI, the SBA-OIG, the Secret Service, or a multiagency task force.

The investigation phase can last months or years before you know about it. Agents interview former employees, subpoena bank records, pull your tax transcripts. By the time they knock on your door, they usualy have a pretty complete picture of what happened.

Heres something critical: never talk to federal agents without an attorney present. There are numerous cases were someone decided to speak to an investigator without a lawyer and was then charged with obstruction or making false statements – charges that wouldnt have existed if they had just remained silent.

The Charges Stack Up Fast

PPP fraud cases rarely involve a single charge. Federal prosecutors love to stack charges because it creates pressure to plead guilty and makes defendants look worse at trial. A typical PPP fraud indictment might include:

Wire Fraud (18 USC 1343) – Up to 20 years per count, or 30 years if it involves a financial institution. Every email, every wire transfer, every electronic communication related to the fraud can be a seperate count.

Bank Fraud (18 USC 1344) – Up to 30 years and $1 million fine. This applies because PPP loans went threw financial institutions.

Making False Statements (18 USC 1014) – Up to 30 years for making false statements to a federally insured financial institution.

Conspiracy (18 USC 371) – Up to 5 years. If anyone else was involved in preparing or submitting your application, this gets added.

Aggravated Identity Theft (18 USC 1028A) – Mandatory 2 years consecutive if you used someone elses information. This runs on top of everything else.

Money Laundering (18 USC 1956) – Up to 20 years per violation if you moved the money around after recieving it.

A single fraudulent PPP application can easily generate a dozen charges carrying combined statutory maximums of 50+ years. Nobody gets the statutory maximum, but the charge-stacking creates enormous leverage for prosecutors in plea negotiations.

Real Cases, Real Sentences

Understanding whats actualy happening in courtrooms matters more than theoretical penalties. The numbers lawyers throw around – “up to 30 years” – dont mean anything without context. What matters is what judges are actualy doing in real cases with real defendants. Heres the pattern thats emerging and its not encouraging for anyone facing these charges.

The Repeat Offender: In SDNY, a defendant who obtained over $10 million threw fraudulent PPP and EIDL applications was sentenced to 25 years in prison – to run consecutive to a 63-month sentence he was already serving for a prior fraud conviction.

The Bank Manager: A former bank branch manager who organized a conspiracy to help others obtain 38 fraudulent PPP loans totaling $5 million was sentenced to 65 months in October 2024.

The Long Island Case: A defendant who submitted applications with fake financial data and fabricated payrolls, then filed fraudulent forgiveness applications, received 48 months.

The Multi-State Ring: A woman who obtained $3.28 million in fraudulent PPP loans is facing up to 20 years following her 2024 indictment.

The pattern is clear. Federal judges are imposing real prison time for PPP fraud. The era of probation for these cases is over. Even relatively small-dollar fraud cases are resulting in months or years of incarceration.

What makes these sentences even more striking is the comparison to pre-pandemic fraud cases. Defendants who commited similar dollar-value fraud schemes before COVID often recieved probation or short sentences. The political pressure around pandemic relief fraud has changed the calculus entirely. Judges feel they need to send a message, and defendants are paying the price for that message.

Another thing defendants dont realize – restitution orders almost always accompany these sentences. Your not just going to prison. Your coming out owing the full amount of the fraud, plus interest in some cases. The government will garnish wages, seize assets, and pursue collection for decades if necessary. The financial consequences extend far beyond any prison term.

What a Defense Actualy Looks Like

Defending PPP fraud charges requires a multi-pronged approach. The specific strategy depends on where your case stands and what the evidence shows, but effective defenses generally fall into several categories.

Lack of Intent: Federal fraud requires willful intent to deceive. If you made mistakes on your application due to confusion about constantly-changing SBA rules, thats different from deliberate fraud. Early in the pandemic, guidance was evolving daily. Many businesses filed applications based on lender instructions that later turned out to be incorrect.

Reliance on Professionals: If you relied on your accountant, bookkeeper, or loan officer to prepare your application, and they made representations you believed to be true, that can negate the intent element. You cant defraud someone if you genuinely believed the information was accurate.

Challenging the Loss Calculation: The intended loss calculation is often contestable. If prosecutors are adding loan applications that were denied, there may be arguments that those shouldnt count. If multiple applications were for the same employees during different time periods, that might be double-counting.

Statute of Limitations: While the limit is 10 years, there are procedural requirements for when charges must be filed. An experienced attorney can identify if any counts are time-barred.

Constitutional Challenges: Illegal searches, improper subpoenas, and other constitutional violations can result in evidence suppression. The government makes mistakes, and those mistakes have consequences.

Sentencing Mitigation: Even if conviction is inevitable, theres still work to be done. Presenting mitigating factors – genuine business need during the pandemic, family circumstances, first-time offender status, charitable works – can influence the judge’s decision. The difference between guidelines-minimum and guidelines-maximum can be years of prison time.

Heres something else most lawyers wont explain clearly – the difference between fighting charges and fighting sentences. Sometimes the evidence is overwhelming and fighting the charges would be foolish. But even in those cases, skilled defense work during the sentencing phase can dramatically reduce the actual time served. The guidelines are advisory, not manditory. Judges have discretion. Using that discretion requires building a compelling narrative about who you are beyond the charges.

Your Next Steps

If your facing a PPP fraud investigation or charges in New York City, time is critical. The decisions you make now will affect everything that follows. Here is what you should do immediately:

Stop talking. Dont discuss your PPP loan with anyone – not federal agents, not your accountant, not your bank, not even family members who might later be subpoenaed as witnesses.

Preserve documents. Dont destroy anything, but gather and organize what you have. Your attorney will need to see your original loan application, supporting documents, bank records, and any forgiveness paperwork.

Contact experienced federal defense counsel. This is not a case for a general practitioner or someone who primarily handles state court matters. Federal criminal defense is specialized, and PPP fraud defense is a subspecialty within that.

Call Spodek Law Group at 212-300-5196 to discuss your situation. We understand the stakes and we understand how to navigate the federal system in New York. Whether your at the investigation stage, facing an indictment, or preparing for trial, we can help you understand your options and fight for the best possible outcome.

The federal government has made PPP fraud prosecution a priority. Dont let yourself become another statistic in there enforcement reports. Get qualified legal help now.

Understanding the Investigation Timeline

One question we hear constantly – how long does a PPP fraud investigation take? The honest answer is there’s no standard timeline. Some cases move from first contact to indictment in months. Others take years. The DOJ COVID-19 Task Force is still activly pursuing cases from loans issued in 2020 and 2021.

What we do know is that the government moves methodicaly. Once your flagged, investigators will build there case completely before making contact. They subpoena bank records going back years. They interview former employees, business partners, accountants. They obtain copies of every document you submitted. By the time you know your under investigation, the government probly has most of what it needs.

This is why early intervention matters so much. If you suspect your being investigated – unusual bank inquiries, former employees mentioning FBI contacts, a subpoena to your accountant – thats the time to get counsel involved. Not after the agents show up. Not after the indictment. Before any of that happens.

The team at Spodek Law Group understands the federal investigation process intimatly. We know what prosecutors need to build a case and how to disrupt that process legally and ethically. We know when cooperation makes sense and when it dosent. We know how to protect your rights while also protecting your future.

Every PPP fraud case is different. The amount involved, the evidence available, the venue, the cooperativeness of co-defendants – all of these factors influence strategy. What works in one case might be disastrous in another. Thats why cookie-cutter advice is dangerous in federal criminal defense.

If your dealing with a PPP fraud investigation or charges in New York, reach out to us at 212-300-5196. Let us evaluate your specific situation and give you real guidance based on the facts of your case. The consultation is confidential and theres no obligation. But waiting to make that call could be the most expensive decision you ever make.