Navigating PPP and EIDL Fraud Allegations in Indiana

When COVID-19 hit, the government rolled out big relief programs like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program to help small businesses stay afloat. But with billions of dollars flowing fast, some folks saw a chance to take advantage. Now prosecutors are cracking down on fraud cases across the country, including right here in Indiana.If you're accused of PPP or EIDL fraud, having an experienced legal team can make all the difference. The lawyers at Arnold & Porter in Indianapolis understand how these programs work and the strategies prosecutors use. They can spot weaknesses in the government's case and build the strongest defense.

Will PPP loan fraud be investigated?

Prosecutors are aggressively going after PPP and EIDL fraud nationwide. As of June 2022, the Department of Justice reported over 500 people had been charged in federal court for pandemic program fraud totaling over $750 million. They've gone after individuals, groups, and crime rings trying to exploit the relief money.Some common allegations include:

Lying on PPP or EIDL applications
Using PPP funds for unauthorized expenses
Applying for multiple PPP loans for one business
Applying for PPP loans for fake businesses
Applying for more than one EIDL loan
Giving false info about employees, revenue, costs to get bigger loans

PPP loans were supposed to go toward payroll, rent, utilities - that kind of thing. EIDL loans were for working capital and operating costs. Prosecutors dig into bank records looking for improper spending.

How to prove PPP loan fraud?

A good federal defense lawyer can poke holes in the government's case. Here are some strategies they might use:

Attack flawed applications - Many had inadvertent mistakes or confusing questions. The defense can argue it wasn't on purpose.
Show lack of intent - Prosecutors have to prove you knowingly lied. The defense will say you acted in good faith.
Challenge improper spending - Hard to separate PPP money from other revenue. Dispute whether expenses were really unauthorized.
Question multiple charges - Each application must be false to stick. Argue some applications were valid.

In one Indiana case, a judge dismissed charges against a Valparaiso businessman accused of PPP fraud, saying prosecutors didn't prove intent. A good lawyer can make similar arguments to undermine the prosecution.

What About Sentencing?

If convicted of PPP or EIDL fraud, the defense will try to reduce the sentence. Federal fraud sentences follow the U.S. Sentencing Guidelines, which consider things like:

Amount of loss
Sophistication of the fraud
Defendant's criminal history
Leadership role?
Accepting responsibility?

The amount of loss drives the guideline range. The defense will scrutinize the prosecution's loss number and dispute any unfair enhancements. Other arguments for a lower sentence:

Overstated harm - Government ultimately recovered most funds or had minimal loss
One-time mistake - More lenient if fraud was a one-off, not a pattern
Family impact - Judges consider effects on spouse and kids
Charity work - Community service and philanthropy can mean lower sentence
Health issues - Illnesses and disabilities may justify lower sentence for proper treatment

In December 2022, an Indianapolis woman got just probation for seeking over $500k in fraudulent PPP and EIDL loans. Her lawyer cited health issues and caring for her kids. Understanding these factors is huge for defendants.

Avoiding Civil Liability

In addition to criminal penalties, PPP and EIDL fraud can lead to civil lawsuits under the False Claims Act. This allows whistleblowers to file suits and recover triple damages.To avoid False Claims liability, try to get a deferred prosecution agreement admitting wrongdoing but avoiding conviction. Convictions can be used as evidence of fraud in civil cases later.The lawyers at Phillips & Cohen have extensive experience defending False Claims Act cases. They understand how civil and criminal matters intersect and can help mitigate liability.

Can I report someone for PPP loan fraud?

How a Lawyer Can Help

Having an experienced fraud defense lawyer makes all the difference. They can identify weaknesses in the prosecution's case and present persuasive arguments to undermine the charges. For anyone facing PPP or EIDL fraud accusations in Indiana, building the strongest defense possible is critical. The stakes are high, but the right legal team can help navigate this complex process and achieve the best possible outcome.