ppp loan fraud lawyers

PPP Loan Fraud Lawyers

Thanks for visiting Spodek Law Group, a second-generation criminal defense firm managed by Todd Spodek, with over 50 years of combined experience defending federal fraud cases throughout the United States. PPP loan fraud prosecutions have exploded since 2020 – federal prosecutors are aggressively pursuing business owners who allegedly made false statements on Paycheck Protection Program applications, used funds for unauthorized purposes, or engaged in what the government calls “loan stacking” by obtaining multiple loans through different entities. What makes these cases particularly dangerous is that prosecutors dont need to prove you intended to defraud the government permanently – they only need to show you made material false statements or misrepresented information on your application, even if you planned to use the money legitimately or thought you were eligible. The penalties are severe: bank fraud carries up to 30 years in federal prison, wire fraud up to 20 years, and prosecutors routinely stack multiple charges for single loan applications, exposing defendants to decades of incarceration for conduct that business owners often believed was permissible or justified given the economic crisis.

What Constitutes PPP Loan Fraud

The federal government defines PPP fraud broadly, encompassing any false statement or misrepresentation made to obtain loan proceeds. This includes inflating the number of employees your business had, overstating payroll expenses, certifying your business was operational before February 15, 2020 when it wasnt, using a shell company or nominee to apply for loans, or claiming your business was eligible when you knew it didnt meet Small Business Administration requirements. Look, what’s particularly insidious about PPP fraud prosecutions is that the government applies strict liability to statements made on applications – they dont care if you relied on an accountant’s advice, if you made honest mistakes under time pressure when applying, or if economic uncertainty made it difficult to accurately project how you’d use the funds. If the statement on your application turns out to be false, prosecutors argue that’s fraud regardless of your intent or the circumstances surrounding the application.

Common Prosecution Theories

Prosecutors charge PPP fraud under multiple federal statutes, and they typically stack charges to maximize exposure and pressure defendants into guilty pleas. Bank fraud under 18 U.S.C. § 1344 is the most serious charge, carrying 30 years maximum and applying whenever you allegedly made false statements to obtain funds from a financial institution – which includes PPP loans since banks distributed the funds on behalf of SBA. Wire fraud under 18 U.S.C. § 1343 applies when you used electronic communications – emails, online applications, bank transfers – in furtherance of the alleged fraud. False statements under 18 U.S.C. § 1001 criminalize lying to federal agencies, and prosecutors use this statute when you allegedly misrepresented information to SBA even if the bank approved your loan. Money laundering charges get added when you spent PPP proceeds in ways prosecutors claim show you knew the funds were obtained fraudulently – buying luxury items, transferring money offshore, or using proceeds for purposes unrelated to business operations.

How the Government Builds Cases

Federal investigators analyze loan data looking for red flags: loans disproportionate to business size, multiple loans to related entities, businesses formed shortly before the pandemic, or spending patterns inconsistent with legitimate business expenses. Once they identify suspicious loans, they subpoena bank records, tax returns, and payroll documentation. They interview former employees and business partners looking for evidence contradicting loan applications. What many defendants dont realize is that prosecutors dont need to prove the entire loan amount was fraudulent – they can charge you for overinflating expenses by even small amounts, arguing any material misstatement constitutes fraud even if you were legitimately entitled to some proceeds.

Defenses to PPP Loan Fraud Charges

The strongest defenses to PPP fraud charges focus on challenging the government’s proof of intent and materiality. Prosecutors must prove you knowingly made false statements – that you didnt just make mistakes or rely on incorrect information from accountants or business partners. We challenge intent by presenting evidence that you believed your business was eligible, that you relied on professional advice when completing applications, that ambiguity in SBA guidance made it genuinely unclear whether your situation qualified, or that you made good-faith errors under time pressure during the economic crisis. We also challenge materiality – prosecutors must prove the false statement was material, meaning it influenced the lending decision. If the bank would have approved your loan anyway even with accurate information, or if the misstatement was minor and didnt affect your loan amount, that undermines the fraud charge.

Statute of Limitations

Congress extended limitations for PPP fraud to 10 years, though legal challenges are emerging about whether that extension applies to all PPP loans or only those directly tied to disaster relief. We examine when you allegedly committed the fraud and when prosecutors filed charges to determine if limitations defenses apply. The statute starts running when the fraud was complete – not when discovered – so prosecutorial delays might create defenses even within the 10-year window.

Negotiating with Prosecutors

When prosecutors have strong evidence, negotiating favorable plea agreements becomes critical. We negotiate for reduced charges – pleading to false statements rather than bank fraud reduces exposure from 30 years to 5 years. We advocate for lower loss amounts, which dramatically affect sentencing guidelines – the difference between $150,000 and $550,000 can mean 5 additional years. We explore cooperation agreements where providing information about others can result in substantial assistance departures. But cooperation requires careful consideration – it involves testifying against co-defendants, which carries retaliation risks. For many defendants, cooperation isnt realistic, and we fight for the best outcome through alternative strategies like demonstrating limited role, accepting responsibility early, and presenting powerful mitigation.

What Spodek Law Group Does

We challenge PPP fraud cases from investigation through trial and appeal. We file motions to suppress evidence obtained through illegal searches or improper subpoenas. We challenge the legal sufficiency of charges through motions to dismiss, arguing that conduct prosecutors allege doesnt constitute fraud under federal law. We conduct independent financial analysis showing that loan amounts were justified or that alleged misstatements werent material. We investigate cooperating witnesses aggressively, uncovering their criminal histories, prior lies, and motivations to fabricate. We hire forensic accountants who testify that business circumstances made it reasonable to believe you were eligible, that accounting methods you used were legitimate, or that spending patterns were consistent with business operations. At trial, we cross-examine government witnesses about ambiguities in SBA guidance, rushed application processes, and lack of clear standards that made compliance genuinely difficult. We present character witnesses, business partners, and community members who testify about your reputation for honesty and legitimate business operations. At sentencing, we argue for downward departures and variances based on mitigating factors – lack of sophisticated fraud, good-faith belief in eligibility, economic desperation during pandemic, family circumstances, and rehabilitation efforts. At Spodek Law Group, we’ve defended federal fraud cases across the country for decades. You can reach us 24/7 at our offices throughout NYC and Long Island. When federal prosecutors charge you with PPP fraud, aggressive defense focused on intent, materiality, and mitigating circumstances can mean the difference between probation and decades in prison.