Criminal Defense Lawyers

PPP Loan Fraud / CARES Act Fraud

PPP Loan Fraud / CARES Act Fraud: What You Need to Know in 2024

As we enter 2024, the Department of Justice (DOJ) is ramping up its efforts to investigate and prosecute fraud related to Paycheck Protection Program (PPP) loans and other pandemic relief funds provided through the CARES Act. At Spodek Law Group, we’ve seen a significant increase in clients facing federal investigations and charges stemming from alleged PPP and CARES Act fraud. If you’re concerned about potential exposure or have already been contacted by federal authorities, it’s critical to understand the current landscape and how to protect yourself.

The Government’s Renewed Focus on Pandemic Relief Fraud

The COVID-19 pandemic may feel like ancient history at this point, but for federal prosecutors, the investigations are just getting started. In 2024, we’re seeing an aggressive push by the DOJ to root out and punish fraudulent activity related to pandemic relief programs. Some key things to know:

• The DOJ has expanded its COVID-19 Fraud Enforcement Strike Force teams and charged over 3,000 defendants so far
• An estimated $200 billion or more in pandemic relief funds may have been fraudulently obtained
• The Small Business Administration (SBA) is scrutinizing the 98% of PPP loans it hasn’t yet manually reviewed
• Civil False Claims Act cases against PPP borrowers and lenders are expected to surge

Why the renewed focus now? Simply put, the government gave out trillions in aid very quickly during the crisis, with minimal upfront vetting. Now that the dust has settled, they’re going back with a fine-toothed comb to find fraud and abuse.As experienced federal criminal defense attorneys, we’ve defended clients against pandemic relief fraud charges across the country. If you have concerns about your PPP loan or use of CARES Act funds, don’t wait to get legal counsel. Early intervention is critical.

Common Types of PPP and CARES Act Fraud

Federal investigators are looking at a wide range of potentially fraudulent activities related to pandemic relief programs. Some of the most common issues we’re seeing include:

• False certifications on loan applications
• Misuse or misappropriation of PPP funds
• Submitting false information to obtain loans
• Applying for multiple loans under different business names
• Failure by lenders to properly evaluate loan applications

Here’s a breakdown of how these different types of fraud typically occur:

The penalties for PPP and CARES Act fraud can be severe. We’ve seen clients facing decades in federal prison and millions in fines and restitution. That’s why it’s so important to have experienced legal counsel if you’re under investigation.

Red Flags That May Trigger a Federal Investigation

So how do you know if you might be at risk of a PPP or CARES Act fraud investigation? Here are some of the key red flags that tend to attract scrutiny from federal authorities:

Christine Twomey

2024-03-21

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2024-03-18

Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!

Guerline Menard

2024-03-18

Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️

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2024-03-15

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2024-03-15

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2024-03-12

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2024-03-12

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2024-02-28

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divesh patel

2024-02-24

I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

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• Significant discrepancies between PPP loan amounts and typical payroll/expenses
• Sudden formation of new businesses right before applying for PPP loans
• Using PPP funds primarily for owner distributions or large asset purchases
• Failure to maintain proper documentation of how PPP funds were used
• Dramatic increases in revenue or employee count reported on loan applications

If any of these apply to your situation, it doesn’t necessarily mean you’ve committed fraud. But it does mean you could be at higher risk of an audit or investigation. We strongly recommend consulting with an experienced federal defense attorney to evaluate your risk and develop a proactive strategy.

What to Do If You’re Under Investigation

If you’ve already been contacted by federal investigators about potential PPP or CARES Act fraud, it’s crucial that you take the right steps to protect yourself. Here’s what we advise our clients:

1. Don’t panic, but take it seriously. An investigation doesn’t guarantee charges, but it’s a very serious matter.
2. Exercise your right to remain silent. Don’t speak to investigators without an attorney present.
3. Preserve all relevant documents. Don’t delete or destroy anything that could be evidence.
4. Contact an experienced federal defense attorney immediately. The sooner we can intervene, the better.
5. Be prepared for search warrants or subpoenas. Have a plan in place if authorities show up.
6. Consider conducting an internal audit. This can help identify issues proactively.

Remember, anything you say to investigators can be used against you. That’s why it’s so important to have skilled legal counsel by your side from the very beginning.

How Spodek Law Group Can Help

At Spodek Law Group, we have extensive experience defending clients against federal fraud charges, including PPP and CARES Act fraud cases. Our team includes former federal prosecutors who understand how the DOJ builds these cases – and how to fight them effectively.We offer comprehensive representation for PPP and CARES Act fraud matters, including:

• Responding to federal subpoenas and information requests
• Negotiating with prosecutors to avoid charges when possible
• Developing strong defense strategies if charges are filed
• Navigating complex sentencing issues to minimize penalties
• Handling parallel civil proceedings and whistleblower claims

When you work with us, you get a team of seasoned attorneys who will fight tirelessly to protect your rights and freedom. We understand how stressful and overwhelming a federal investigation can be. That’s why we’re available 24/7 to answer your questions and provide the guidance you need.Don’t face this alone. Call us today at 212-300-5196 for a free, confidential consultation about your case. Let us put our experience and expertise to work for you.

The Road Ahead: What to Expect in PPP/CARES Act Enforcement

As we look ahead to the rest of 2024 and beyond, here are some key trends we’re anticipating in PPP and CARES Act fraud enforcement:

• Increased use of data analytics to identify suspicious patterns in loan applications
• More civil False Claims Act cases, including whistleblower (qui tam) lawsuits
• Expanded focus on lenders who failed to properly vet loan applications
• Continued criminal prosecutions of the most egregious fraud cases
• Potential new legislation to strengthen fraud prevention measures

The bottom line is that federal authorities are far from done investigating pandemic relief fraud. If anything, we expect enforcement efforts to accelerate in the coming months and years.That’s why it’s so critical to be proactive if you have any concerns about your PPP loan or use of CARES Act funds. Don’t wait for the government to come knocking. Reach out to an experienced federal defense attorney now to evaluate your situation and develop a strategic plan.At Spodek Law Group, we’re here to help guide you through this complex and high-stakes process. With our deep expertise in federal criminal defense and our track record of success, we can provide the strong advocacy you need to protect your rights and future.Remember, the choices you make now can have profound consequences down the road. Don’t leave your fate to chance. Contact us today at 212-300-5196 for a free, confidential consultation about your case. Let’s work together to develop a winning strategy and fight for the best possible outcome.