Nashville PPP Loan Fraud Lawyers

Nashville PPP Loan Fraud Lawyers

You’re in Nashville thinking federal prosecutors have bigger fish to fry. Maybe you’re telling yourself that Music City isn’t exactly Wall Street – that the feds are focused on New York bankers and California tech bros, not Tennessee small business owners who stretched the truth on a PPP application. Five years of silence has convinced you the investigation moved on to more important targets.

That’s exactly what Leslie Bethea thought. She applied for PPP loans while sitting in federal prison. Literally incarcerated. And she still believed nobody would catch her.

Welcome to Spodek Law Group. Our goal is education first – helping you understand what you’re actually facing in the Middle District of Tennessee before panic sets in. Todd Spodek has defended clients in federal courts across the country, including individuals in Nashville who assumed the government had forgotten about pandemic loan fraud. The government hadn’t forgotten. It was building cases.

Nashville Isn’t What You Think

Heres the number that should terrify anyone who took a questionable PPP loan in Tennessee: $137 million. Thats how much the Middle District of Tennessee collected in pandemic fraud recoveries in fiscal year 2024 alone. Not over five years. In one year. That dosent sound like a sleepy southern office that cant be bothered with small cases.

The Middle District covers Nashville, but also Murfreesboro, Columbia, Cookeville, and dozens of smaller communities. Every federal prosecutor in that district has pandemic fraud cases on their desk. Every FBI agent assigned to Nashville has a queue of PPP investigations. The Task Force isnt winding down – its still running at full capacity, and the cases hitting courtrooms now are for loan applications submitted in 2020 and 2021.

Think about what $137 million in recoveries actualy means. That represents hundreds of individual cases. Plea agreements. Convictions. Restitution orders. Civil settlements. Forfeiture actions. Every one of those cases started as a quiet investigation that the defendant didnt know about. The subpoenas went to banks. The requests went to accountants. Tax records got pulled. And by the time anyone realized their was an investigation, the evidence was already compiled.

Heres the uncomfortable reality about Nashville. Federal prosecutors here have secured some of the longest sentences in the country for PPP fraud. Were talking about a district where a woman got 78 months – six and a half years – for a scheme she ran from inside a prison cell. If thats what happens to someone who was already incarcerated, imagine what happens to someone whos been walking free for five years thinking they got away with something.

The Woman Who Applied From Prison

Leslie D. Bethea’s case should keep every PPP fraud defendant in Tennessee awake at night. Not because her scheme was sophisticated – it wasnt. Because of where she was when she submitted her applications.

She was in federal prison. Already serving time. Behind bars. And she still filed PPP loan applications claiming to operate legitimate businesses.

Let that sink in for a moment. The SBA cross-references applications against Bureau of Prisons records. When your social security number comes back as belonging to a current federal inmate, the investigation dosent start slowly. It starts with the kind of scrutiny that ends careers and freedom.

Bethea recieved $20,805 in PPP funds. She used that money for a trip to Trump National Doral resort in Florida. She used it for cosmetic surgery. She used it for personal expenses that had absolutly nothing to do with keeping employees on payroll during a pandemic – because she didnt have employees. She didnt have a business. She was sitting in a prison cell.

The sentence: 78 months federal prison. Six and a half years. Added to whatever time she was already serving. The judge wasnt impressed by the audacity. Neither was the prosecutor. The message from the Middle District was clear: theres no scheme too absurd to prosecute.

If a woman in federal prison thought she could get away with PPP fraud, what makes you think your situation is any safer?

Kingdom of God Inc. and the Fake Religious Employees

Chad Thomas from Nashville created a company called Kingdom of God Inc. The name alone should have raised red flags. But it gets worse.

According to court documents, Thomas didnt just create a fake company. He created fake employees. And not just any fake employees – he listed the names of famous religious figures as his fictitious workforce. Real, recognizable names from religious history, appearing on payroll documents submitted to the federal government.

The fraud amount was $307,700. The sentence was 40 months federal prison. Thats more than three years for a scheme that, in hindsight, seems almost impossibly stupid. Famous religious figures on a payroll? How did he think that would survive even basic scrutiny?

But heres what matters for anyone reading this in Nashville. Thomas probly thought the same thing everyone thinks: the government has millions of applications to review. They dont have time to check every employee name. They wont notice. The amount isnt big enough to attract attention.

He was wrong. The SBA’s data matching systems flagged the application. Investigators pulled the thread. And now Chad Thomas is doing 40 months in federal prison while Kingdom of God Inc. exists only as a case number in court records.

Heres the thing about absurd schemes: they dont get lighter sentences. Judges dont give you credit for creativity. The sentencing guidelines dont have a “this was really dumb so we’ll go easy” provision. Thomas got 40 months because $307,700 in fraud triggers specific base offense levels, and nothing about the ridiculousness of his scheme reduced those calculations.

The Cat Breeding Company That Never Existed

Shelby Lynn Hill’s scheme had a different kind of creativity. She claimed to operate a business called Premium Persians of the Plateau. A cat breeding operation. Highend Persian cats in Tennessee.

The problem: the company didnt exist. There were no cats. There was no breeding operation. There was no plateau of premium persians. The whole thing was fabricated to obtain PPP funds.

What did she use the money for? She built a swimming pool at her home. Not payroll for employees keeping cats alive during a pandemic. A swimming pool. For herself.

The sentence: one year and one day in federal prison. That specific formulation – a year and a day rather than exactly a year – has significance in federal sentencing. It makes the defendant eligible for good time credit, meaning she could serve about 10 months with good behavior. But its still federal prison. Its still a felony conviction. Its still something that follows her for the rest of her life.

Premium Persians of the Plateau dosent exist anymore. It never did. But Shelby Lynn Hill’s federal conviction is very real, and its permanent.

Ten People, One Indictment, $950,000

In October 2023, federal prosecutors in the Middle District unsealed an indictment against ten individuals. Not ten seperate cases. Ten people charged together in a single conspiracy. Total fraud amount: approximately $950,000.

This is how pandemic fraud investigations often end – not with one defendant, but with everyone who touched the scheme getting charged at once. When investigators pull on a thread, they dont stop at the first person. They follow the money. They follow the relationships. They identify everyone who participated, facilitated, or benefited.

Think about what that means in practice. Ten people who probly knew each other. Ten people who may have thought their role was minor. Ten people who are now looking at the same prosecutor, the same judge, and the same set of evidence.

When ten people get charged together, cooperation becomes the only currency that matters. The prosecutor offers deals to whoever talks first. The person who provides useful information gets consideration at sentencing. The person who stays silent while everyone else cooperates gets the harshest outcome.

Heres the math that keeps defendants awake at night. If your facing ten years and someone else is facing ten years, and only one of you can cooperate effectively, whos going to talk first? Are you confident that every person you worked with will stay loyal when their looking at a decade in federal prison?

How the Middle District Builds Cases

Let me explain how investigations actualy work in the Middle District, because most people get this completly wrong.

The FBI dosent show up at your door first. That happens later, if it happens at all. The investigation starts with paperwork. A referral from the SBA. A suspicious activity report from a bank. A tip from a disgruntled employee or business partner. An algorithm that flagged your application because the numbers didnt match your tax filings.

Once your file gets opened, investigators start collecting. They subpoena your bank records – and the bank cant tell you. They pull your tax returns from the IRS – and you dont get notified. They request documents from your accountant, your bookkeeper, anyone who might have relevant records. The investigation happens in silence because it happens through documentation.

The Task Force in Middle Tennessee combines FBI agents, IRS Criminal Investigation specialists, SBA Office of Inspector General investigators, and state-level resources. Their all looking at the same data from different angles. When your PPP application said you had fifteen employees making $500,000 in payroll, and your Tennessee state unemployment filings show three employees, someone in that network is going to notice.

Heres what most people dont understand about federal investigations. By the time you hear from investigators – if you ever do – the investigation isnt beginning. Its essentialy over. They already have your bank records. They already have your tax returns. They already know what you submitted versus what was actualy true. The interview, if one happens, is just to see if youll tell more lies that can be charged as additional federal crimes.

This is why the silence in Nashville isnt safety. Its the sound of an investigation you dont know about reaching conclusions you wont like.

The FBI agents working these cases arent generalists who handle a little of everything. Their financial crimes specialists. Career federal law enforcement with decades of experience tracing money through shell companies and fake invoices and inflated payroll records. When they open your file, they already know what questions to ask. They already know where the inconsistencies are. The only question is whether youve prepared answers – or whether youll be improvising in the worst moment of your life.

Civil Settlements: The Church and the Corporation

Not everyone who committed PPP fraud in Tennessee is going to federal prison. Some are paying civil settlements instead. But “civil” doesnt mean “no consequences.”

Mount Zion Baptist Church settled with the government for $70,464 under the False Claims Act. A church. Settling fraud allegations related to pandemic relief. The details of what happened arent fully public, but the settlement speaks for itself: even religious institutions face accountability for misuse of PPP funds.

Koide Tennessee Inc. settled for $2 million. Two million dollars returned to the government under the False Claims Act. Thats a company that wont face criminal charges, but will write a check for seven figures and live with the public record of a fraud settlement.

Heres the thing about civil settlements. Their often offered when the fraud is clear but the intent evidence is complicated. When prosecutors can prove you took money improperly but might struggle to prove you knew it was wrong. The civil settlement becomes a way to recover funds without the expense and uncertainty of a criminal trial.

But dont mistake civil for easy. A $2 million settlement devastates most businesses. A $70,000 settlement devastates most individuals. And the settlement itself becomes public record – searchable, findable, explaining to future partners and creditors and employers that you had to pay the government back for pandemic relief fraud.

Some people prefer the civil path to the criminal one. At least your not going to prison. But the financial and reputational damage can be just as permanent.

Your Options in the Middle District

If your reading this because you took a PPP loan in Nashville and your worried it wasnt entirely legitimate, you have three basic options. None of them are perfect. Each carries its own risks. But doing nothing – waiting and hoping – is almost certainley the worst strategy.

Option 1: Wait and hope. This is what most people do. You tell yourself the government is probly focused on bigger targets. You hope your name never surfaces. Maybe it works out. But if it dosent – if that knock comes two years from now – youll have wasted years you could have spent preparing. You wont have organized documents. You wont have thought through explanations. Youll be making panic decisions when agents are at your door.

Option 2: Voluntary disclosure. In some cases, coming forward before your contacted can result in more favorable treatment. The DOJ has shown willingness to credit cooperation, including self-disclosure. The Sentencing Guidelines specificaly allow for reductions when defendants accept responsibility early. But this is risky. Your essentialy confessing to conduct the government might never have discovered. What if your application wasnt actualy fraudulent? What if there were legitimate explanations? Coming forward could create problems that wouldnt have existed otherwise.

Option 3: Get counsel now and prepare. Even if you dont do anything proactive, having a lawyer review your situation means youll be ready if something happens. Youll understand your exposure. Youll have thought through responses. You wont be scrambling when the worst happens. A good federal defense attorney can look at your PPP application, compare it to your actual business records, and tell you honestly what your facing.

At Spodek Law Group, we handle federal criminal defense matters across the country, including the Middle District of Tennessee. The consultation is protected by attorney-client privilege – nothing you tell us can be used against you. That means you can be completely honest about what happened without fear that your words will end up in a prosecutor’s file.

Heres what preparation actualy looks like. You gather every document related to your PPP application – the application itself, the payroll records you submitted, your actual bank statements from 2019 and 2020, your tax returns, any communications with accountants or loan preparers. You review what you actualy said versus what was actualy true. You identify discrepancies. You think through explanations. You consider whether those explanations will hold up under scrutiny.

If agents show up, you already know what to say: “I’m invoking my right to remain silent and I want to speak with my attorney.” You already have an attorney who knows your situation. Your not improvising.

The Clock Is Running in Nashville

Congress extended the statute of limitations for PPP fraud to ten years. That means a loan application from April 2020 can be prosecuted until April 2030. The government has five more years for 2020 applications. Six more years for 2021 applications. The clock isnt running out – its barely past the halfway point.

The Middle District Task Force isnt shutting down. The $137 million collected in FY 2024 proves the infrastructure is still running. Cases are still being built. Indictments are still being drafted. The next prosecution in Nashville could already be in final review. It could have your name on it.

Federal sentences are not like state sentences. There is no parole in the federal system. When you get 40 months like Chad Thomas, you serve at least 85% of that – 34 months minimum. When you get 78 months like Leslie Bethea, you serve at least 66 months. Good behavior shaves off some time, but your not getting out in half the sentence like some state systems allow. The time is real. The prison is real. The separation from family and career and normal life is real.

And after you serve your sentence, the consequences continue. Professional licenses get revoked. Certain jobs become impossible. Travel to other countries gets complicated. A federal fraud conviction follows you on every background check, every job application, every professional opportunity for the rest of your life.

The silence you’ve been hearing in Nashville isn’t safety. It’s just the part of the investigation where they haven’t finished building the case yet.

If your facing potential PPP fraud exposure in Nashville or anywhere in Tennessee, the time to talk to a lawyer is now. Not after the FBI shows up. Not after you receive a target letter. While you still have options. While the decisions you make can actually affect what happens next.

Call 212-300-5196 for a confidential consultation. The Middle District is still working. The question is whether they’re working on your file.

Leslie Bethea thought being in prison made her invisible. Chad Thomas thought Kingdom of God Inc. was clever. Shelby Lynn Hill thought nobody would check on the Persian cats. All of them were wrong. All of them are paying the price. The silence in Nashville ends when it ends – and you dont get to pick the timing.