Arizona PPP Loan Fraud Lawyers

Arizona PPP Loan Fraud Lawyers

FBI agents contacted you about your 2020 PPP loan. Or an SBA audit flagged your Arizona business for investigation. You filled out forms during lockdowns when guidance changed weekly, got approved, survived the pandemic. Now federal prosecutors in the District of Arizona say you committed fraud. You’re reading about Anthony and Eric Karnezis from Sedona who pleaded guilty in March 2025 to conspiracy to commit wire fraud—prosecutors allege they fraudulently obtained nearly $109 million in COVID relief funds through Blueacorn. You know Arizona federal prosecutors still charge cases in 2025 for 2020 loans. You’re wondering if your survival loan becomes a federal felony in Phoenix or Tucson federal court.

Thanks for visiting Spodek Law Group—a second-generation law firm managed by Todd Spodek. We have over 40 years of combined experience defending federal fraud cases, including PPP prosecutions in Arizona federal court. This article tells you what happens from Arizona investigation through sentencing in Phoenix—including recent cases like the Sedona brothers facing 20-year maximums. When District of Arizona prosecutors use 30-year maximum sentences to coerce guilty pleas, your Sixth Amendment right to counsel isn’t optional.

Arizona Still Prosecuting 2020 PPP Loans

The Paycheck Protection Program ended in 2021. So why is the District of Arizona still charging cases? Anthony Karnezis, 43, and his twin brother Eric Karnezis, 43, from Sedona, pleaded guilty in March 2025 to conspiracy to commit wire fraud under 18 USC §1349—prosecutors allege they submitted at least 1,440 fraudulent PPP applications through Blueacorn and obtained nearly $109 million in COVID relief funds. They face sentencing in June 2025 with 20-year maximum sentences. Kimberly Coleman from Mesa was sentenced in April 2023 to 120 months in prison for fraudulently obtaining over $13 million through approximately two dozen PPP applications with her husband Jason. Willie Mitchell from Phoenix was sentenced in February 2023 to 97 months for fraudulently obtaining seven PPP loans totaling $9,470,900. Sean Swaringer from Peoria was sentenced in April 2023 to 121 months for obtaining over $1.5 million in fraudulent PPP loans. Nine Phoenix-area defendants were indicted in December 2021 on 62 counts for attempting to obtain over $30 million in PPP funds. These aren’t old cases wrapping up; these are prosecutions continuing through 2025 for 2020 conduct. Congress extended the statute of limitations to ten years. Arizona federal prosecutors can charge you through 2031 for a 2020 loan. The government distributed over $800 billion with minimal oversight, then prosecuted borrowers when chaos produced questionable applications. When Arizona federal prosecutors target business owners who struggled to interpret contradictory SBA guidance during a pandemic, constitutional protections become the only barrier between aggressive prosecution and wrongful conviction.

Investigation to Sentencing in Arizona

Your first indication of trouble: an SBA auditor sends a letter requesting documentation for your 2020 PPP loan. Payroll records, tax returns, bank statements. Or FBI agents appear at your Arizona business asking to “talk” about your loan application. What you do next determines whether you face charges in Phoenix or Tucson federal court—and if charged, whether you receive probation or prison time like defendants in the District of Arizona. SBA audits flag inconsistencies. FBI opens an investigation, subpoenas documents from your bank and accountant, interviews employees. This lasts months, sometimes over a year. You might not know you’re under investigation until agents contact you or you receive a target letter from an Assistant U.S. Attorney in the District of Arizona. This is when counsel matters most—before you talk to Arizona investigators, before you turn over documents, before irreversible decisions. A federal grand jury in Phoenix charges you with 18 USC §1344 (bank fraud), 18 USC §1014 (false statements to SBA), 18 USC §371 (conspiracy)—30 years, 30 years, 5 years maximum respectively. You’re arrested or surrender at the federal courthouse in Phoenix or Tucson. Initial appearance and detention hearing. Most nonviolent fraud defendants in Arizona are released pending trial. Your Arizona attorney gets discovery. You file motions to suppress evidence, motions to dismiss counts. Plea negotiations begin with the AUSA. Here’s reality: 90% of federal cases resolve through guilty pleas. Not because everyone’s guilty—because of the trial penalty. Arizona prosecutors offer three years if you plead; threaten ten if you go to trial and lose. That coercive power is why your right to trial exists more in theory than practice. You either accept a plea or proceed to trial in Arizona federal court. Sentencing occurs three to six months later. The judge calculates your guideline range based on federal sentencing guidelines—primarily loss amount. Arizona prosecutors argue for prison time. Your attorney argues mitigating factors: repayment, acceptance of responsibility, criminal history, good faith reliance on advice.

Intent

The government must prove you intentionally misrepresented facts on your PPP loan application. Not that you made errors—that you knowingly submitted false information to obtain funds you weren’t entitled to receive. This intent requirement creates the primary defense in Arizona PPP fraud cases: good faith mistake. Consider early 2020’s confusion. The CARES Act left eligibility questions unanswered. The SBA issued FAQs, then revised them repeatedly. How do you calculate “payroll costs” for independent contractors? Can you include owner compensation? These were questions that separated eligibility from fraud charges in Arizona federal court. Suppose you relied on your Arizona accountant to calculate payroll. Your accountant used a methodology including compensation categories the SBA later clarified were ineligible. Years later, District of Arizona prosecutors claim fraud. This is where the intent defense works: you didn’t knowingly submit false information; you relied in good faith on professional advice. That’s not a crime—that’s a paperwork error. Or the SBA guidance was unclear about eligibility. You interpreted it to allow your application. Arizona prosecutors say you were wrong. But criminal fraud requires proof you knew your application was false. If reasonable people disagreed about SBA guidance—and in early 2020, they did—prosecutors can’t prove intentional fraud. Arizona federal prosecutors charge you with 30-year maximum bank fraud, then offer five years to plead. That coercive dynamic forces innocent people to accept convictions. The constitutional principle: punishment should fit the crime in Arizona federal court, not prosecutor discretion. When the line between paperwork error and federal felony depends on interpreting ambiguous pandemic guidance, presumption of innocence separates legitimate prosecution from overreach. The Karnezis brothers from Sedona face 20-year maximum sentences for their June 2025 sentencing after pleading guilty to $109 million in fraudulent applications through Blueacorn. At the other end: defendants who obtained small loans based on good faith errors and repaid before sentencing sometimes receive probation. Sentencing in Arizona federal court depends on loss amount—guidelines increase dramatically as loss increases. Kimberly Coleman received 120 months for $13 million. Willie Mitchell received 97 months for $9.4 million. Sean Swaringer received 121 months for $1.5 million. Acceptance of responsibility: pleading guilty brings a three-level reduction, often the difference between prison and probation in Phoenix federal court. Restitution before sentencing demonstrates remorse. First-time offenders receive lower sentences than those with priors. Cooperation investigating other cases brings significant reductions. When FBI agents searched your Phoenix office, did they have a warrant? If they searched without a warrant or exceeded its scope, evidence gets suppressed under the Fourth Amendment. Sometimes suppressing key evidence collapses the government’s case in Arizona federal court. When agents interviewed you in Arizona, did they advise you of Miranda rights before custodial interrogation? Did they continue questioning after you invoked your right to remain silent? Statements obtained in violation of the Fifth Amendment get suppressed. If your confession was the prosecution’s centerpiece and gets suppressed in Phoenix, the case might collapse. Did Arizona prosecutors rely on evidence from an administrative subpoena that exceeded authority? Did investigators coerce your Arizona accountant into providing privileged documents? These aren’t technicalities—these are constitutional protections that exist because government power can be abused. The “insufficient evidence” defense challenges government burden. Arizona prosecutors must prove every element beyond reasonable doubt. If evidence shows errors but doesn’t prove intentional fraud in Arizona federal court—if your SBA interpretation was objectively reasonable even if wrong—government hasn’t met its burden.

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