NYC PPP Loan Fraud Lawyers.

Most people who end up on the phone with us about a PPP loan in 2026 haven't been visited by an agent. They were sent a letter from the Treasury, or the SBA, or a bank they haven't used in years. Or their tax refund was offset against a debt they didn't know they had. Or a customer forwarded a subpoena that mentioned their company by name.

That's the pattern of PPP enforcement as of this summer. Agents come last, if at all. This page is about what it means if your business is in one of the five boroughs or on Long Island, and what we do about it.

We represent New York businesses and their owners in PPP and EIDL matters. Criminal, civil, and the collections track which is where most of the 2026 activity actually is.

Three doors, not one

Competing pages will repeat PPP fraud is wire fraud and bank fraud with a ten-year clock. That's the criminal door, and it's the one everyone writes about. The government has three distinct routes to come at a PPP loan, and they can all be open at once.

The criminal door is wire fraud, bank fraud, false statements to a lender, aggravated identity theft if someone else's name was used. A jury has to be sure. The sentence is measured in years. There's a page on SDNY sentencing if you want the numbers: look at SDNY PPP sentencing and the ten-year statute.

The civil door is the False Claims Act. If you have real employees, this is probably your door. The same standard as a car accident case, treble damages, penalties per false claim, and a whistleblower who gets a cut. You can be sued for fraud without ever being charged with it.

The third door is paperwork. The SBA decides the loan shouldn't have been made, pulls forgiveness or declines it, and refers the balance to the Treasury for collection. No judge. Nobody accuses you of anything, they just want the money. That door is where the government has been most active.

The 562,000 loans

On April 24, 2026, the SBA pushed 562,000 loans flagged for suspected fraud to the Treasury for collection. $22.2 billion. The same borrowers were transmitted to the Department of Justice on the same day. These were loans flagged years ago and left alone. After the referral they're moving.

The agency has also frozen out more than 150,000 borrowers in five states, tied to over $10 billion. California, Ohio, Wisconsin, Minnesota, Maine. New York hasn't been named. The honest read is that nobody knows the order. A suspended borrower loses access to every SBA program, which matters if you ever bid on government work.

Here is what a Treasury referral does, step by step. At 120 days past due the debt can go into the Treasury Offset Program, which sits between you and any federal check: tax refunds, Social Security in some cases, contractor payments. At 180 days it goes to cross-servicing, which adds the tools a private lender would need a judgment to use. The referral is required by statute, 31 U.S.C. 3711, so nobody at the SBA has to decide to do it. It's a process, not a decision. Offsets can begin without further notice. And for our purposes, a Treasury letter about a PPP loan is evidence you've been flagged.

You can contest it. There's a window and a form. We rarely see anyone who used it before calling us.

New York's civil cases aren't about fake companies

The PPP cases in the news are people who applied for 1,500 loans. The New York cases in 2026 are about companies you've heard of.

In February, Alice + Olivia paid $3.2 million to settle claims it wasn't eligible for a second-draw loan because, counting its affiliates, it had more than 300 employees. In May, Lafayette 148 in Brooklyn agreed to pay $3 million on the same theory. In July, four labor unions and a benefit plan paid $3.85 million because tax-exempt organizations weren't allowed in until later. And in August, the Southern District sued Michael Shabsels and 28 companies for $13 million in forgiven second-draw loans, alleging he checked “no” on the common-ownership question more than twenty times. The Corporate Group Rule capped a group at $4 million. His companies sought $17 million.

Four settlements, and they all turn on one thing: what else is yours. That is the affiliation rule. Real companies, real payroll, money spent on wages. Didn't matter.

If you are on the cap table somewhere else, or own a piece of someone else's, or have a management agreement, or a foreign parent, start there. Not whether you needed the loan. Whether the application counted everyone.

One more thing about Alice + Olivia. The people running it went to the government before the government came to it, and got credit for it under the Justice Manual. That credit is available to anyone who moves first. It is also not for everyone.

How cases start now

Midsummer the SBA announced its use of Palantir software to surface leads in pandemic loan data. The pilot started earlier in the year. The description in the announcement is to surface data and leads, support criminal enforcement, and assist in the recovery of funds. What it means in practice is that the loan file, the tax returns, the corporate filings, the bank records, and the forgiveness application get matched at a scale that used to take a decade. A 2025 GAO report faulted the referral controls, and the fix is a contract.

The other engine is the public loan database. Every PPP loan over a threshold is searchable by name, amount, and lender. Anyone with a spreadsheet can. A relator doesn't need to be an insider. A qui tam suit can be filed under seal, investigated for a year or two, and joined by the government during which time you'll likely get a records request and not understand why.

We don't know yet whether the Palantir referrals will produce more criminal cases or mostly civil ones. Civil is cheaper for them.

The state clock

Federal is not the whole map. In December 2025, the Brooklyn District Attorney and the New York State Inspector General went after six members of one family for $166,000 in PPP and related relief, filed through fictitious businesses. State charges. State court. Different prosecutors, different rules.

Under $200,000. Which tells you where the floor is. A case the Southern District wouldn't take can still be charged in state court.

Who is actually on the other side

It matters to know who sent the letter. The SBA Office of Inspector General has an Eastern Regional Office, and its special agent in charge is on the press releases. The Southern District's civil frauds unit brought Alice + Olivia and Shabsels. The Eastern District brought Lafayette 148. The Treasury's Bureau of the Fiscal Service is a different agency entirely, with different rules. A relator's lawyer, if there is one, works for a share. And a private collection agency, if the debt has gone to cross-servicing, works for Treasury on commission.

Five parties, none of them coordinating with the others. Which one you're talking to decides what you can say.

What we do

First we work out which track this is. A Treasury letter is one thing. The response to each is different, and paying quietly can be read as an admission.

Then the whole file, and we mean whole. The application, the forgiveness application, the payroll records that supported them, the bank statements for the period, the ownership documents for every entity you touch, the emails with whoever prepared the application, and the lender's file which is often the most useful document and the hardest to get. We rebuild the numbers from scratch. If the employee count was wrong, we want to know whether an accountant made the call.

Then a decision, with you. Sit tight. Negotiate the civil number. Build the criminal defense in parallel. Sometimes all three at once, and that's fine.

We are not the right call for everyone. A $40,000 loan with a clean payroll and a Treasury letter is a phone call, not a retainer. We'll say it plainly.

What to do this week

Don't engage with the SBA, the Treasury, or a lender until you understand which door it is. Explanations are what turns a debt into a case.

Don't sign anything new. Don't try to clean it up. A correction made after you've been flagged reads differently than one made before.

Do gather. Every entity's formation documents and ownership as of the loan date. Payroll reports for 2019 and 2020. The lender's file. The forgiveness application and everything attached to it. The preparer's name and their emails. And any letter, from anyone, mentioning the loan, dated.

Then pick up the phone. If a lawyer prepared the application, call us anyway.

We've handled PPP matters at all three doors, in the Southern and Eastern Districts and in state court. If we think the letter is just a debt, we'll say it and you'll save the fee. If we think it's a case, we'll tell you which door and how long you have.

Attorney on call, 24/7. Use the number at the top.