PPP Loan Stacking 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 prosecutions nationwide. If you’re facing charges for PPP loan stacking, you’re accused of one of the most aggressively prosecuted forms of pandemic fraud: obtaining multiple PPP loans through different entities that prosecutors claim were created or used improperly to multiply loan amounts beyond what you were legitimately entitled to receive. Federal prosecutors treat loan stacking as sophisticated fraud schemes rather than good-faith mistakes, charging defendants with bank fraud carrying 30-year maximums, wire fraud, false statements, and sometimes conspiracy and money laundering when multiple people were involved or funds were moved in ways prosecutors claim demonstrate criminal intent. What makes stacking cases particularly dangerous is that prosecutors don’t need to prove all the loans were fraudulent – they can charge you for obtaining multiple loans even if some were legitimate, arguing that the pattern demonstrates intent to defraud the program.

What Prosecutors Call Loan Stacking

The term “loan stacking” describes obtaining multiple PPP loans through different applications that prosecutors claim violated program rules. The most common stacking scenarios federal prosecutors charge include: applying through multiple entities you own or control, using the same employees or payroll across multiple applications to inflate total loan amounts, creating shell companies with no legitimate business operations solely to submit additional applications, applying as both an individual and through business entities for the same payroll, and submitting applications for related entities without discclose the relationships to lenders.

PPP program rules prohibited businesses from receiving more than one loan per entity, and required applicants to certify they hadn’t applied for or received loans through other entities covering the same employees or payroll expenses. Prosecutors argue that submitting multiple applications covering the same employees or payroll constitutes fraud even if each individual application was technically accurate in isolation. They claim the pattern demonstrates you knowingly exploited the program to obtain funds you weren’t entitled to receive.

Common Stacking Scenarios Prosecutors Charge

One scenario involves business owners who legitimately operate multiple separate entities – separate LLCs or corporations with distinct operations, employees, and business purposes – and who applied for PPP loans through each entity. Prosecutors charge these as stacking schemes when they claim the entities aren’t truly separate: they share employees, operate from the same location, perform similar services, or are managed by the same people. Defense argues the entities are legitimately separate businesses entitled to individual loans under program rules, while prosecutors claim they’re shells created to multiply loan amounts.

Another scenario involves business owners who applied as sole proprietors or independent contractors and also applied through business entities they own. Program rules allowed individuals to receive loans based on self-employment income, but prohibited receiving multiple loans covering the same income or expenses. Prosecutors charge these cases arguing the individual and business applications covered the same payroll or income, while defendants claim they legitimately had both self-employment income and separate business payroll qualifying for distinct loans.

Identity Theft and Nominee Stacking

More serious stacking cases involve defendants who prosecutors allege used stolen identities or nominee applicants to submit multiple fraudulent applications. These cases often involve dozens or hundreds of applications using fabricated businesses, stolen Social Security numbers, and false documentation. Prosecutors charge these as organized fraud schemes, adding conspiracy charges under 18 U.S.C. § 371, aggravated identity theft charges under § 1028A carrying mandatory consecutive 2-year sentences, and money laundering charges when funds were moved between accounts or withdrawn as cash. These cases result in the harshest sentences – defendants with no prior records receiving 8-10 years in federal prison for conduct prosecutors frame as systematic exploitation of pandemic relief programs.

Defenses to Loan Stacking Charges

The strongest defense in many stacking cases argues that multiple entities were legitimately separate businesses entitled to individual loans under program rules. We present evidence showing: the entities had distinct employees who worked exclusively for one business, they operated from different locations, they performed different services or served different markets, they maintained separate financial accounts and records, they filed separate tax returns reporting distinct income and payroll, and they existed and operated for years before the pandemic rather than being created specifically to apply for loans.

We challenge prosecutors’ claims that entities were shells by presenting evidence of legitimate business operations: contracts with customers, invoices for services, bank records showing operational income and expenses, testimony from employees and customers who interacted with the separate businesses. We show that applying through multiple entities wasn’t an attempt to defraud the program but rather a legitimate exercise of program rules allowing separate businesses to receive individual loans.

Ambiguous Guidance Defenses

During 2020, SBA guidance about related entities and loan eligibility was unclear and changed multiple times. We present evidence that reasonable business owners could interpret guidance differently than prosecutors now claim was required. We show that your interpretation – that separate entities with distinct payroll were entitled to individual loans – was defensible based on language in interim final rules and SBA FAQs. We present expert testimony from accountants and attorneys who advised clients during 2020, explaining how guidance was understood by professionals and why your conduct was consistent with reasonable interpretations.

Challenging Intent and Materiality

Prosecutors must prove you knowingly violated program rules – that you understood multiple applications were prohibited but submitted them anyway with criminal intent. We challenge intent by presenting evidence that you disclosed your multiple entities to lenders, that you consulted professionals who advised the applications were permissible, that you believed in good faith you were eligible for multiple loans based on how you understood program rules. Even if your interpretation was ultimately incorrect, lack of criminal intent defeats fraud charges.

We also challenge materiality – whether alleged violations actually affected the amount of funds you received. If you obtained $200,000 through two entities but would have qualified for $200,000 through a single properly structured application, prosecutors can’t prove you received more than you were entitled to. If the loans covered distinct payroll expenses that were all legitimate business costs, that undermines claims that you defrauded the government even if the technical application process violated rules.

Negotiating Stacking Cases

When evidence is strong, negotiation becomes critical. Stacking cases often involve high loss amounts because prosecutors calculate loss as the total of multiple loans, which drives sentencing guidelines into ranges calling for significant prison time. We negotiate by arguing for reduced loss calculations: if two $100,000 loans covered $150,000 in legitimate payroll expenses, actual loss is only $50,000 rather than $200,000. We present evidence that funds were used for legitimate business purposes, reducing loss even further.

We push for reduced charges – pleading to false statements under 18 U.S.C. § 1001 instead of bank fraud reduces maximum exposure from 30 years to 5 years. We advocate for resolving cases through single counts rather than charging every loan application as a separate count, reducing guideline calculations and theoretical exposure. We explore cooperation agreements when defendants can provide information about others involved in fraud schemes, though cooperation requires careful evaluation of risks including retaliation and having to disclose all criminal conduct.

Sentencing in Loan Stacking Cases

Federal judges impose harsh sentences in stacking cases because they view them as more sophisticated than simple application fraud. The use of multiple entities, nominees, or identities suggests planning and premeditation that judges consider aggravating factors. But even in serious stacking cases, powerful mitigation can result in below-guideline sentences.

We present evidence showing: you operated legitimate businesses for years before the pandemic, you faced economic desperation that drove decisions rather than greed, you made efforts to use funds for business purposes even if expenditures didn’t perfectly match SBA requirements, you’ve accepted responsibility and repaid amounts, you have strong family and community ties, you lack criminal history, and the unique circumstances of pandemic crisis created unprecedented pressure on business owners. We’ve secured probationary sentences and below-guideline terms for defendants in stacking cases by humanizing them to judges and demonstrating that their conduct, while illegal, wasn’t motivated by sophisticated criminal intent.

Conspiracy Charges in Multi-Defendant Cases

Stacking cases often involve multiple defendants – business partners, family members, accountants, or others who participated in submitting applications. Prosecutors charge conspiracy under 18 U.S.C. § 371 when they claim multiple people agreed to commit fraud and took steps to further the scheme. Conspiracy charges are dangerous because they make all defendants responsible for the entire amount of fraud committed by any member of the conspiracy, and because prosecutors can use statements by co-conspirators against you even if those statements would otherwise be inadmissible hearsay.

We defend conspiracy charges by challenging whether agreements existed, arguing that each defendant acted independently without coordinating fraud schemes. We present evidence that you weren’t aware of others’ conduct, that you believed your own applications were legitimate even if co-defendants acted criminally, that your role was minimal and you withdrew from any conspiracy before substantial steps were taken. We negotiate with prosecutors to resolve cases through substantive fraud charges rather than conspiracy, limiting your exposure to your own conduct rather than being held responsible for everything alleged co-conspirators did.

What Spodek Law Group Does in Stacking Cases

We defend PPP loan stacking cases nationwide, challenging prosecutors’ characterizations of multiple entities as shells by presenting evidence of legitimate separate businesses. We attack intent by showing you disclosed information to lenders and consulted professionals. We challenge loss calculations by demonstrating that funds covered legitimate expenses. We negotiate reduced charges and favorable loss amounts that lower guideline ranges.

We present powerful mitigation at sentencing showing lack of sophisticated criminal intent despite using multiple entities. We defend conspiracy charges by demonstrating you acted independently without criminal agreements. We’ve secured favorable outcomes for clients facing decades of exposure in stacking cases by aggressive defense focused on challenging prosecutors’ theories at every stage.

At Spodek Law Group, Todd Spodek has defended high-profile cases that others called unwinnable – like the client whose story became a Netflix series. When you’re facing federal loan stacking charges, aggressive defense determines whether you’re looking at probation or decades in prison. We’re available 24/7. Reach out now – stacking cases are complex and require immediate strategic defense to challenge prosecutors’ characterizations of your businesses and conduct.