Welcome to Federal Lawyers. Our goal is to give you the information you need to understand what your facing if your under investigation for PPP loan fraud in New York City. This isnt a simple legal problem with a simple solution. Federal prosecutors have made pandemic relief fraud a priority, and the consequences of getting this wrong are devastating.
If your reading this, you probably took a PPP loan during COVID and something has gone sideways. Maybe the FBI showed up. Maybe you got a subpoena from the SBA Office of Inspector General. Maybe your bank called with questions about your forgiveness application. Whatever triggered your search, you need to understand something most lawyers wont tell you: the timing of your case matters more than what you actually did.
Defendants sentenced in 2024 and 2025 receive prison terms 40% longer on average than defendants sentenced in 2021 and 2022 for the exact same conduct. Same fraud amount. Same guidelines calculation. Same judge in some cases. The only difference is when the gavel came down. Thats the reality of PPP fraud defense in New York City right now.
The Forgiveness Letter Means Nothing
Heres the kicker – your PPP loan forgiveness dosent protect you. At all. The SBA has flagged 37,938 previously forgiven loans totaling $4.6 billion for potential clawback. They call it “Hold Code 70” and its basicly a marker that says we forgave this loan but now we think something was wrong with it.
Think about that number. Almost 38,000 business owners who thought they were in the clear, who got there forgiveness letter and put this whole nightmare behind them, are now facing renewed scrutiny. The government can go back and retract forgiveness on a PPP loan that was previusly approved. They have the authority and there using it.
OK so you might be thinking – Ill just pay it back. Thats actualy one of the worst things you can do. The DOJ has literaly used voluntary repayment as “consciousness of guilt” evidence in prosecutions. The thing you think will save you becomes the thing that convicts you. Its completly counterintuitive but thats how federal prosecutors operate. If you werent guilty, why would you pay it back? Thats there argument.
This is why you need representation before you make any moves. our lead attorney and the team at Federal Lawyers have seen clients who tried to fix the situation themselves and made everything worse. A quick phone call to a federal agent without counsel. A voluntary repayment that triggered investigation. An email to the bank that became exhibit A at trial.
SDNY is Different and Thats Not Good
Heres something your other lawyers probly wont tell you – venue matters enormusly in federal PPP fraud cases. The Southern District of New York, which covers Manhattan and the surrounding areas, is one of the most agressive districts in the country for these prosecutions. SDNY has an 88% indictment rate and prosecutors there prefer grand jury indictments even for cooperative defendants.
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(212) 300-5196The same crime that gets you 12 months home confinement in Texas can get you 48 months in SDNY. Same facts. Same guidelines range. Completly different outcome. Your ZIP code is literaly determining your fate more then your conduct.
SDNY is known for harsh sentences in white-collar cases and PPP fraud is no exception. If your case is being investigated by federal agents in Manhattan, you need to assume your going to be indicted regardless of how cooperative you are. Thats not pessimism – thats the statistical reality of that courthouse.
Heres were it gets even more complicated. The federal government often has discretion about where to prosecute. If your fraud involved banks in multiple states or wire transfers that crossed jurisdictions, prosecutors can pick there venue. And if you live in NYC or the tristate area, they will almost always pick SDNY because its there home court.
The Intended Loss Trap
Most people dont understand how federal sentencing works for fraud cases. The guidelines use something called “intended loss” not actual loss. So if you applied for $200,000 in PPP loans but only recieved $50,000 before getting caught, the guidelines use the $200,000 figure.
Todd Spodek
Lead Attorney & Founder
Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.
Let that sink in. The money you never got counts against you at sentencing. Every fraudulent application you submitted – even the ones that got denied – gets added to your intended loss calculation. Prosecutors will comb threw every loan application you touched and add them all together.
You submitted a PPP loan application during COVID and now realize some employee count numbers may have been inaccurate.
Could this be considered fraud?
Inaccuracies in PPP applications can trigger federal fraud charges carrying up to 20 years in prison. However, honest mistakes differ from intentional misrepresentation. Documentation of your good-faith efforts is critical to your defense.
This is general information only. Contact us for advice specific to your situation.
The loss calculation drives everything in federal fraud sentencing. Heres how it works:
- Fraud under $6,500: Base offense level only
- Fraud over $15,000: Add 2 levels
- Fraud over $40,000: Add 4 levels
- Fraud over $95,000: Add 6 levels
- Fraud over $3.5 million: Add 18 levels
- Fraud over $9.5 million: Add 20 levels
Each 2-level increase translates to significently more prison time. And the increses accelerate as the numbers go up. Someone who applied for $500,000 across three applications is looking at a dramaticaly different sentence than someone who applied for $50,000 once – even if the actual conduct was simular.
