Michigan PPP Loan Fraud Lawyers

Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek, with over 40 years of combined experience defending federal criminal cases nationwide. If you’re facing a PPP loan fraud investigation in Michigan, you need to understand what’s at stake. Federal prosecutors in the Eastern and Western Districts of Michigan have been aggressive about pursuing pandemic loan fraud cases, and Michigan business owners are getting charged with serious federal crimes for conduct that ranges from deliberate fraud schemes to honest mistakes on confusing applications.

Detroit, Grand Rapids, Ann Arbor, Lansing, Flint – we’re seeing cases throughout Michigan. The exposure is significant: wire fraud carries 20 years in federal prison, bank fraud carries 30 years, and making false statements carries 5 years. Federal investigators aren’t just targeting obvious scammers – they’re scrutinizing legitimate business owners who inflated payroll numbers, who misunderstood eligibility requirements, who used funds in ways they thought were acceptable but technically weren’t.

How Michigan Business Owners Get Investigated

Michigan saw billions in PPP loans distributed during the pandemic. Manufacturing companies, restaurants, retail stores, auto suppliers – thousands of businesses applied for and received emergency funding. Now federal investigators are auditing those loans systematically, comparing applications against tax returns, matching claimed payroll against actual records, tracking where funds went by reviewing business bank accounts.

What triggers an investigation? The SBA flags your loan for audit. Maybe there’s a discrepancy between your application and your forgiveness request. Maybe your loan amount seems disproportionate to your reported 2019 revenue. Maybe an algorithm identifies unusual patterns in your application. Maybe someone – a disgruntled employee, a former business partner – tips off investigators. That referral goes to the SBA Office of Inspector General, then to the FBI or IRS Criminal Investigation.

They spend months building their case before you know they’re investigating. They pull your complete loan file from the SBA. They subpoena your business bank records going back years. They review your tax returns. They interview your employees. They sometimes conduct surveillance on your business. By the time they contact you – whether by phone call, home visit, grand jury subpoena, or target letter – they’ve already gathered extensive evidence and formed conclusions about your guilt.

Common Allegations in Michigan Cases

You inflated your employee count to qualify for a larger loan. You claimed 20 employees when you actually had 14. You said your business was operational before February 2020 when it wasn’t. You used PPP funds for non-payroll expenses that weren’t covered under program rules. You received multiple PPP loans using related business entities without disclosing the connections. You certified you weren’t delinquent on federal debts when you were. These are the actual allegations we see in Michigan prosecutions.

Take a typical Detroit scenario: an auto supplier applied for a $90,000 PPP loan based on 2019 payroll. On the application, they claimed 16 full-time equivalent employees. But when investigators pulled their 2019 tax returns, only 11 W-2 employees were reported. The difference? The owner included some independent contractors who did regular work and thought that was reasonable. To federal prosecutors in Detroit federal court, that’s wire fraud under 18 U.S.C. § 1343.

Or consider the Grand Rapids restaurant owner who received a $65,000 PPP loan and used $45,000 for payroll and rent as required, but used $20,000 for expenses they thought were covered – equipment repairs, supplier payments to keep the business afloat. The PPP rules were confusing about what qualified beyond the core categories. Federal prosecutors don’t care about the confusion – they see misuse of government funds.

Why Criminal Intent Is the Key Defense Element

Federal fraud charges require proof of criminal intent. Prosecutors must prove you knowingly made false statements with intent to defraud. This intent element is where defenses get built. Did you genuinely misunderstand the application requirements? The PPP program was created quickly in March 2020 with confusing guidance that changed multiple times. Did you reasonably believe independent contractors counted toward your employee total? Did you think certain expenses qualified when the rules were ambiguous?

Good faith mistake is a real defense. If your conduct resulted from honest misunderstanding rather than intentional deception, that negates criminal intent. We build this by documenting the confusion around program rules, showing you consulted with accountants or attorneys, demonstrating you relied on professional advice, proving you used funds for business purposes even if not technically covered under strict program requirements.

Reliance on professional advice is powerful. If you worked with a CPA who calculated your payroll numbers or helped prepare your PPP application, and you provided them with accurate information, their errors or misinterpretations don’t become your criminal liability. We gather all communications with advisors showing you sought guidance and relied on their expertise in good faith.

The Federal Investigation Process

Most Michigan defendants we work with had no idea they were under investigation until federal agents showed up or they received a target letter. Federal agents might call you asking to “discuss your PPP loan.” They might show up at your business or home. You might receive a grand jury subpoena demanding documents. Or you could get a target letter from the U.S. Attorney’s Office stating you’re under investigation and inviting you to make a statement.

None of these require you to talk to them. You have a Fifth Amendment right to remain silent – use it. Even if you believe you did nothing wrong, talking to federal agents without a lawyer is dangerous. They’re trained investigators who know exactly how to ask questions that elicit admissions or create inconsistencies in your story. Those inconsistencies become evidence of “consciousness of guilt” or outright lying – which is itself a separate federal crime.

Michigan Federal Court Sentencing

Michigan has two federal districts: Eastern District (covering Detroit, Ann Arbor, Flint, Bay City) and Western District (covering Grand Rapids, Lansing, Kalamazoo, Marquette). Federal judges in both districts have varied approaches to sentencing PPP fraud cases. Some are more lenient with first-time offenders who used funds partially for legitimate purposes. Others take pandemic fraud seriously, viewing it as exploitation of a program designed to help struggling businesses.

Sentencing calculations start with the U.S. Sentencing Guidelines. Fraud offense levels are based on loss amount – the PPP loan amount you received. A $20,000 loan results in one base offense level; a $200,000 loan results in a much higher level. Then enhancements apply: sophisticated means, affecting a financial institution, being an organizer if others were involved. Your criminal history category adjusts the guideline range.

A typical scenario: $80,000 in fraudulent PPP loans, no criminal history, partial legitimate use of funds. Base offense level might be 14. After enhancements, you’re looking at 15-21 months in guideline range. Without cooperation or substantial mitigation, that’s likely your sentence. With cooperation and strong mitigation arguments – family responsibilities, health issues, community support, employment history – probation becomes possible. With aggravating factors like obstruction, you could face significantly more time.

Cooperation Agreements in Michigan

Federal prosecutors in Michigan often offer cooperation deals. You plead guilty and agree to provide information about other PPP fraud schemes or participants. In exchange, the government files a motion for downward departure under U.S.S.G. § 5K1.1 or Rule 35(b), which can reduce your sentence below guideline ranges – sometimes substantially.

We’ve seen cooperation reduce sentences from years in prison to probation. But cooperation comes with risks. You’re admitting guilt to your own conduct. You’re potentially testifying against others. You’re spending time in proffer sessions with prosecutors. And there’s no guarantee the sentence reduction will be worth it – that’s entirely discretionary with the prosecutor and judge.

Before agreeing to cooperate, your lawyer needs to negotiate the specific terms. What exactly do prosecutors want you to admit? What information do they want about others? What’s the realistic sentence benefit? What happens if your cooperation doesn’t provide as much value as they hoped? These details matter because once you’ve signed a cooperation agreement and made statements, you can’t retract them.

Why Spodek Law Group Handles Michigan Cases

We’re based in New York but defend federal criminal cases nationwide. Federal law applies the same way in Michigan as anywhere else – same criminal statutes, same sentencing guidelines, same procedural rules. What varies is local prosecutor culture, judicial temperament, and enforcement priorities. We adapt by researching recent Michigan case outcomes, understanding your specific judge’s sentencing history, and knowing what arguments resonate in your district.

Todd Spodek is a second-generation lawyer who grew up working in his father’s law firm, watching court proceedings from childhood. He’s handled hundreds of federal cases – from high-profile matters featured on Netflix to complex white-collar prosecutions that never made headlines. Our team includes former federal prosecutors who understand how these investigations work, what evidence the government needs, and where weaknesses exist in their cases.

Our approach: get involved early, before charges if possible. We conduct our own investigation – gathering your business records, interviewing witnesses, analyzing your PPP application and how funds were actually used. Sometimes we present evidence to prosecutors that convinces them not to file charges. Other times we negotiate favorable plea terms that minimize your exposure. And when necessary, we go to trial. We’ve taken on cases other firms said were unwinnable.

You can reach us anytime – we’re available 24/7 for consultations. Initial calls are risk-free with no time limits. We want you to understand your situation fully before deciding whether to hire us. We use a completely digital portal for all communications, documents, and billing so you can manage your case from anywhere in Michigan. And we work on transparent fee structures without surprises or hidden costs.

What You Must Do Right Now

Don’t talk to federal agents without a lawyer present. Even if you think you’re just clarifying misunderstandings, everything you say gets documented and used against you. Agents are trained to ask questions that elicit admissions or create inconsistencies. Those inconsistencies become evidence of lying.

Don’t destroy documents or delete communications. That’s obstruction of justice under 18 U.S.C. § 1519, carrying up to 20 years in federal prison. Even if an email or bank statement seems damaging, destroying it after you know there’s an investigation makes everything exponentially worse. Your lawyer can work with problematic documents; prosecutors use destroyed documents to prove consciousness of guilt and add new charges.

Don’t discuss your case with anyone except your attorney. Not your business partner. Not your spouse. Not your accountant. Federal investigators can subpoena all of them to testify about what you said. Only attorney-client communications are privileged.

Hire a federal criminal defense lawyer who handles white-collar cases, not a general practice attorney. PPP fraud prosecutions involve complex financial documentation, sentencing guideline calculations, cooperation negotiations, and federal court procedure. You need someone who does this regularly.

Call us before this gets worse. Federal investigations don’t just disappear. They either result in declined prosecution – which requires your lawyer actively presenting your defense to prosecutors – or they result in indictment. Which outcome you get depends on having experienced representation from the moment you learn you’re under investigation. The earlier we get involved, the more options you have and the better outcome we can achieve.