Fighting PPP and EIDL Fraud in Iowa

Hey there! I wanted to provide some helpful information for Iowa small business owners about issues related to potential fraud with the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. I know this can be a concerning topic, but hopefully this article can break things down in an easy-to-understand way and provide useful resources.

What are the PPP and EIDL Programs?

First, a quick refresher - the PPP and EIDL programs were created by the federal government's Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency financial assistance to small businesses impacted by the COVID-19 pandemic. These programs threw struggling business owners like us a lifeline when we needed it most. The PPP provided potentially forgivable loans to help cover payroll, rent, utilities and other expenses during COVID shutdowns and slowdowns. The EIDL program offered low-interest working capital loans and emergency grants.

Where Fraud Can Occur

While these programs were a huge help for many legitimate businesses, unfortunately the rushed rollout and reduced oversight also created opportunities for fraud and abuse. Here are some of the common ways scammers have abused PPP and EIDL:

• Lying on loan applications about business revenues, payroll, number of employees, etc. to get bigger loans
• Applying for multiple PPP loans through different lenders for the same business
• Using PPP funds for personal purchases instead of approved business expenses
• Creating fake businesses to apply for EIDL grants and loans
• Stealing identities to apply for loans under someone else's name

Some real shady stuff. Authorities have prosecuted many PPP and EIDL fraud cases across the country, including right here in Iowa.

Iowa PPP and EIDL Fraud Cases

Will PPP loan fraud be investigated?

Federal prosecutors in the Northern and Southern Districts of Iowa have been aggressively going after COVID-19 relief fraud. Here are a few recent cases:

• In July 2022, Kyle William Sakyi of northwest Iowa was sentenced to over 3 years in federal prison for obtaining over $1 million in fraudulent PPP loans using falsified documents for fake businesses.
• In March 2022, Des Moines resident Lavonda Bailey was charged with wire fraud for allegedly getting over $400k in PPP and EIDL loans using false employee and revenue numbers.
• In June 2021, Cedar Rapids businessman Maurice Gipson was sentenced to over 2 years in prison for fraudulently obtaining $1.1 million in PPP loans using shell companies.
• In April 2021, Storm Lake resident Simon Saw-Teong Ang was charged with wire fraud for seeking over $500k in EIDL and PPP loans under fake businesses.

Yikes. As you can see, PPP and EIDL fraud is taken very seriously here in Iowa, with multi-year prison sentences and restitution orders common.

Penalties for PPP and EIDL Fraud

What is the punishment for PPP loan fraud?

So what kind of penalties are we talking about here? Well, it depends on the specific criminal charges like wire fraud, bank fraud, false statements, etc. But here's what defendants often face:

• Up to 30 years in federal prison
• Fines up to $1 million
• Paying back money to the lender or government
• Losing any proceeds from the fraud

Yikes again! Even exaggerating some numbers on your application can lead to felony fraud charges and years behind bars. The government does not mess around with this stuff. There can also be civil lawsuits, getting banned from government contracts, and other non-criminal penalties. So it's really important to know your rights and have an experienced legal team on your side.

Protecting Yourself

If you find yourself under investigation related to PPP or EIDL loans, stay calm but act quickly. Here are some tips:

• Be upfront and cooperative with authorities, but don't answer questions without your lawyer present.
• Hire a lawyer ASAP - an experienced federal defense attorney can protect your rights.
• Your lawyer can argue the allegations are wrong, fight procedural mistakes, negotiate settlements, and more.
• If charges can't be avoided, your lawyer can seek the best possible plea deal or sentence.

Having the right legal defense makes a huge difference in these cases. Don't go it alone against the feds! I hope this overview gives Iowa business owners a good understanding of the issues around PPP and EIDL fraud. We've all struggled during COVID - let's make sure we protect ourselves while following the rules. Stay safe out there!