Federal Sentencing Guidelines for PPP Loan Fraud: What to Expect

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We have over 40 years of combined experience in federal criminal defense. If you’re facing PPP fraud charges, you need to understand how federal sentencing actually works. The United States Sentencing Guidelines drive the outcome in these cases, and judges follow them more often than not.

How the Guidelines Calculate Your Sentence

Federal sentencing isn’t arbitrary. Judges use a mathematical formula based on the United States Sentencing Guidelines Manual. Two primary factors determine your guideline range: the offense level and your criminal history category.

For fraud cases under USSG §2B1.1, you start with a base offense level of 6 or 7. Then the court adds levels based on the loss amount. A fraud involving $15,000 to $40,000 adds 4 levels. Fraud between $40,000 and $95,000 adds 6 levels. Between $95,000 and $150,000 adds 8 levels.

The increases accelerate as the loss amount grows. Fraud exceeding $3.5 million adds 18 levels. Over $9.5 million adds 20 levels. Over $25 million adds 22 levels. Each additional level translates to months or years of additional prison time.

Your criminal history category ranges from I (no criminal history) to VI (extensive criminal history). Most first-time PPP fraud defendants fall into Category I.

The Loss Amount Drives Everything

Loss calculation is the single most important factor in PPP fraud sentencing. It’s not just the amount you received – it’s the intended loss, which can be much higher.

Say you applied for $200,000 in PPP loans but only received $50,000 before getting caught. The guidelines use the $200,000 figure, not $50,000. Intended loss counts even if you never got the money.

If you submitted multiple fraudulent applications, the government aggregates them. Three applications for $30,000 each equals $90,000 in total loss – pushing you into a higher sentencing bracket than a single $30,000 fraud.

Defense attorneys fight hard over loss calculations because small differences create significant sentencing impacts. The difference between $95,000 and $96,000 is one dollar – but it’s the difference between adding 6 levels or 8 levels to your offense level.

What Counts as Loss

Loss includes the loan amount plus any interest. It also includes costs the government incurred investigating and prosecuting your fraud. Some judges include the administrative costs of processing fraudulent applications even if they were denied.

Restitution calculations work differently than loss calculations for sentencing purposes. You can end up owing less in restitution than what the guidelines used to calculate your prison sentence – or sometimes more if victims suffered consequential damages.

Adjustments That Increase Your Sentence

Once the court determines your base offense level and adds the loss amount increase, various adjustments can push your sentence higher.

Leadership role adds 2-4 levels depending on whether you organized five or more participants in the fraud. Even if you just recruited one other person to submit a fraudulent application, you might get a 2-level enhancement.

Sophisticated means adds 2 levels. This applies if you used fake businesses, shell companies, forged documents or elaborate concealment methods. Most PPP fraud involves at least some sophisticated means – fake tax documents, fabricated payroll records, forged bank statements.

Abuse of position of trust adds 2 levels. If you were a bank employee who helped process fraudulent PPP applications, or if you were a CPA who certified false financial information, expect this enhancement.

If your offense involved more than 10 victims, add 2 levels. Some courts treat each fraudulent PPP application as a separate victim – the SBA, the lending bank, the Treasury, and taxpayers generally. This can trigger the enhancement even in cases with relatively few applications.

How to Reduce Your Guideline Range

Acceptance of responsibility is the most common reduction. If you plead guilty before trial and genuinely acknowledge your wrongdoing, you get a 3-level reduction. That can knock 6-12 months off your sentence.

The reduction isn’t automatic. If you plead guilty but blame others, minimize your conduct or fail to cooperate with probation during the presentence investigation, the judge can deny the reduction.

Substantial assistance under USSG §5K1.1 allows sentences below the guideline range if you cooperate with the government. You need to provide information that helps prosecutors build cases against other defendants. The government files a motion asking the judge to depart downward based on your cooperation.

Real cooperation means giving up co-conspirators, testifying at trial if necessary and potentially wearing a wire. The government won’t file a 5K1.1 motion just because you pleaded guilty quickly or admitted your own conduct – they need information they don’t already have.

Minor Role and Minimal Participation

If you played a minor role in a larger fraud scheme, you can argue for a 2-4 level reduction. This works when you were recruited by someone else, had limited knowledge of the overall scheme and received a small portion of the proceeds.

Courts rarely grant minor role adjustments in cases where you were the sole applicant. If you personally submitted the fraudulent application and received the money directly, you were the principal actor – not a minor participant.

What the Guidelines Actually Recommend

For a defendant with no criminal history (Category I) and an offense level of 12, the guidelines recommend 10-16 months in prison. At offense level 15, the range becomes 18-24 months. At level 18, it’s 27-33 months.

These ranges aren’t mandatory. The Supreme Court’s decision in United States v. Booker made the guidelines advisory rather than binding. But judges still use them as the starting point, and most sentences fall within or close to the guideline range.

Judges can vary upward or downward based on factors under 18 USC §3553(a) – the nature and circumstances of the offense, your history and characteristics, the need for deterrence, protecting the public and providing restitution to victims.

In 2025, federal judges are varying upward more often than down in PPP fraud cases. The Department of Justice has emphasized pandemic relief fraud as a priority, and judges are responding with harsher sentences than defendants received in 2021-2022.

What Happens at Sentencing

The probation office prepares a presentence report (PSR) that calculates your guideline range and provides your background to the court. You’ll receive a draft PSR and have the opportunity to object to factual findings or legal conclusions.

Common objections involve the loss amount, whether certain enhancements apply and whether you’re entitled to acceptance of responsibility. Your attorney files written objections, and the court holds a sentencing hearing to resolve disputes.

At the hearing, both sides present arguments. The government typically seeks a sentence at or above the guideline range. Your attorney argues for a below-guideline sentence based on mitigating factors, personal circumstances and the need for proportionality.

Judges usually give defendants an opportunity to speak before imposing sentence. What you say matters. Genuine remorse helps. Excuses, blame-shifting or minimization hurt.

Why You Need an Attorney Who Knows the Guidelines

Federal sentencing is technical and unforgiving. Small mistakes in calculating the offense level or missing available reductions can cost you years in prison.

At Spodek Law Group, we’ve handled federal fraud cases for decades. Our team includes former federal prosecutors who know how sentencing works from both sides. Todd Spodek has successfully defended clients in high-profile cases, including securing a six-month sentence for a defendant in a $12 million Ponzi scheme when prosecutors wanted far more.

We fight over every sentencing factor – loss amounts, enhancements, departures and variances. We know which arguments work with different judges and how to present mitigation evidence effectively. If you’re facing PPP fraud charges, contact us before your presentence investigation begins. Once the PSR is filed, it’s much harder to change the judge’s perspective.