San Francisco PPP Loan Fraud Lawyers

San Francisco PPP Loan Fraud Lawyers

You applied for a PPP loan in 2020. Your startup was burning through runway. Your contractors were stuck at home. Everyone you knew was applying. And the application asked questions about employees that seemed straightforward until you started thinking about your 1099 contractors. Were they employees? For PPP purposes, maybe they counted? Someone told you they did. So you checked the box and moved on.

That was five years ago. You haven’t thought about it since. Until you heard that FBI San Francisco is contacting people about their 2020 applications. Specifically asking about employee counts. Specifically asking about contractor classifications.

Welcome to Spodek Law Group. Our goal is to give you real information about PPP fraud defense in San Francisco – the information other law firm websites won’t share. We represent business owners across the Bay Area who are facing federal investigations, and we believe you deserve to understand exactly what your up against before making any decisions.

The Northern District of California covers San Francisco, Oakland, San Jose, and the entire Bay Area where tech companies and startups scrambled for pandemic relief in 2020. And the cases that have been prosecuted tell a story that should concern anyone who submitted an application with numbers that werent quite right.

If your reading this because someone you know got contacted by investigators – or because you recieved something from the SBA asking for documentation – you need to understand what happens next. And what you think you know about Bay Area leniency is probly wrong.

A Government Employee Who Knew Better Did It Anyway

Heres the first thing Bay Area business owners dont understand about PPP fraud: knowing the system dosent protect you. It makes it worse.

Frank Mosley was a tax enforcement officer for the City of Oakland. Before that, he was an IRS revenue officer. He spent his career investigating tax cheats. He knew exactley how federal fraud investigations work. He knew what triggers them. He knew what investigators look for. He knew the consequences.

And then he submitted fraudulent PPP applications anyway.

Frank Mosley and his brother Reginald conspired to submit fraudulent PPP loan applications. They raked in more then $3 million through the scheme. The Mosley brothers were both sentenced to 30 months in federal prison. Their co-conspirators got 12 to 18 months.

Think about what that means. A former IRS employee. A current city tax enforcement officer. Someone who spent years on the other side of fraud investigations. He did it anyway. And he got caught anyway.

If your thinking “I know someone who works in finance, they said it would be fine” or “my accountant said everyone was doing it” – remember Frank Mosley. He was the person who should have known better then anyone. He worked for the goverment. He investigated fraud. And now hes serving 30 months in federal prison.

The expertise that your advisors claimed to have? Frank Mosley actualy had it. It didnt help him.

Your Shell Company Name Is Evidence

Heres something Bay Area defendants keep getting wrong: they think a clever or obscure company name will hide thier fraud. The opposite is true.

Miranda Devlin of San Francisco named her shell company “Common Nucleus of Cancer, LLC.” Thats the actual name. She formed a company with the word “cancer” in it – a company that had no employees, no operations, and no legitimate buisness purpose – and used it to apply for PPP loans.

She got $32,700 in her first PPP loan. Then she got another $336,100 from the SBA. A total of $368,800 in fraudulent pandemic relief.

And heres the part that makes it worse: Miranda Devlin also impersonated licensed California attorneys. She stole the identities of two real lawyers. She went as far as submitting a change of address request to get one attorney’s State Bar license card mailed to her. She actualy appeared in Bay Area courtrooms pretending to be a lawyer.

She got 18 months in federal prison.

Your shell company name isnt a clever disguise. Its evidance. When prosecutors present your case to a jury, theyre going to show that company name on a screen. “Common Nucleus of Cancer, LLC.” “Blessing Box Co LLC.” Names that obviously dont represent real buisnesses. Names that make the fraud self-evident.

If you formed a company specificaly to apply for PPP loans – and that company had no real operations – the company formation itself is evidence against you.

Zero Employees Claimed As Ten: The Easiest Fraud To Prove

Cassie Will-Darnell of Santa Clara claimed her company had 10 employees and an average monthly payroll of $387,595.

Her company had zero employees. Zero payroll.

Thats not a gray area. Thats not a misunderstanding about contractor classifications. Thats claiming $387,000 per month in wages for workers who didnt exist.

She got $2.8 million in PPP loans based on those fabricated numbers. She was sentenced to 18 months in federal prison. Shes scheduled to begin her sentence on January 7, 2026.

Heres why this case matters: it ilustrates the easiest fraud pattern for prosecutors to prove. You claimed employees. Prosecutors pull your tax records. You filed no W-2s. You had no payroll taxes. You had no employment insurance. Every goverment database confirms that the employees you claimed didnt exist.

The defense of “I was confused about contractor versus employee” dosent work when you claimed 10 employees and had zero of anything. Thats not confusion. Thats fabrication.

If you claimed employees on your PPP application, prosecutors can verify that claim in about fifteen minutes. They pull your 941 payroll tax filings. They pull your W-2 submissions. They pull your state unemployment insurance records. And if those records show zero while your application shows ten – theres no explanation that works.

Silicon Valley’s “Fake It Till You Make It” Ends At Federal Court

Heres something Bay Area tech founders need to understand: the culture that built Silicon Valley becomes a criminal liability when you apply it to federal loan applications.

In the startup world, exaggeration is expected. You overstate your traction to raise money. You project confidence about features you havent built yet. You pitch a vision thats three years ahead of your actual product. Investors understand this. They factor it in. Fake it till you make it is practicaly a buisness strategy.

But PPP applications are federal documents. They go to banks that are insured by the federal goverment. They get forgiven by the Small Buisness Administration. Every statement you make on that form is made under penalty of perjury.

The same inflated numbers that get you a Series A term sheet become bank fraud when you put them on a PPP application.

Lebnitz Tran of San Jose understood Silicon Valley. He submitted 27 PPP loan applications and 7 EIDL applications – 34 applications total. He used false and fictitious information including falsified employee figures and fake tax documents. He sought $8.5 million and obtained $3.6 million.

He used the money for restaurants, retail purchases, personal investment accounts, cryptocurrency, and a $100,000 Tesla from a luxury car dealership.

Tran pleaded guilty to two counts of wire fraud. He faces up to 20 years in federal prison on each count.

The pitch deck rules dont apply here. The “vision over current reality” approach that works with venture capitalists becomes documented evidence of intent to defraud when applied to goverment relief programs.

What You Bought With PPP Money Becomes The Case Against You

Christina Burden of Oakland obtained $992,291 in fraudulent PPP loans and $150,900 in fraudulent EIDL loans. More than $1.14 million total. She had attempted to get $4.5 million.

Her shell company was called “Blessing Box Co LLC.” She claimed 89 employees and a monthly payroll of more than $700,000. The company was fictitious. The employees were imaginary. The payroll was completely fabricated.

And then she spent the money.

Private jet travel. Hotel stays. Boat rentals. Expensive automobiles. Louis Vuitton. Neiman Marcus. Specialty items.

Every purchase became evidence. Every credit card statement proved intent. Every receipt demonstrated that she knew the money wasnt for payroll – because she was spending it on luxury goods instead of employees.

Christina Burden was sentenced to 3 years in federal prison.

Heres what Bay Area defendants dont anticipate: your spending pattern during the pandemic becomes the prosecution’s exhibit list. If you claimed PPP money was for payroll and then bought a Tesla, prosecutors will show the jury that Tesla purchase. If you claimed it was for business expenses and then went to Louis Vuitton, that Louis Vuitton receipt goes into evidence.

The goverment doesnt just take your money back. They use your spending as proof that you knew what you were doing was wrong.

Todd Spodek has represented clients whose spending patterns became the centerpiece of the case against them. The fancy dinner. The vacation. The car payment. Items that seemed reasonable at the time become devastating evidence when prosecutors frame them correctly.

FBI San Francisco Is Contacting 2020 Applicants Right Now

This isnt hypothetical. This isnt “they might investigate someday.” FBI San Francisco is activley contacting people who submitted PPP applications in 2020.

Theyre asking about original applications. Theyre asking specificaly about employee counts. Theyre asking whether independent contractors were counted as employees.

If someone from the FBI or SBA Office of Inspector General has contacted you, your buisness partner, or your accountant – you need to understand that an investigation has already begun. By the time they contact you, theyve already pulled your records. Theyve already compared your application to your tax filings. Theyve already identified the discrepancies they want you to explain.

And heres the part that gets people in more trouble: the conversation itself becomes evidence.

If you tell an FBI agent that you had 10 employees when your records show zero, thats a false statement under 18 U.S.C. § 1001. A seperate federal crime. Even if the original PPP fraud was minor, lying to investigators about it creates additional felony exposure.

Martha Stewart didnt go to prison for insider trading. She went to prison for lying to federal investigators about insider trading. The cover-up became worse then the original conduct.

At Spodek Law Group, we tell clients the same thing every time: if investigators contact you, say nothing until you have counsel. Youre not required to answer questions. You have the right to an attorney. Exercise that right before you create additonal criminal exposure by talking.

California’s Strike Force Teams Were Built To Find You

Heres something most Bay Area defendants dont know: the Attorney General selected California to host one of three national COVID-19 Fraud Strike Force Teams.

These arent regular prosecutors. These are specialized units with enhanced resources. Dedicated federal agents. Mandates to pursue pandemic fraud aggresively. They dont have the case overload of a typical U.S. Attorney’s office. They were created specificaly to investigate and prosecute PPP fraud.

The Central District of California in Los Angeles and the Eastern District in Sacramento jointly host this strike force. They coordinate with the Northern District on Bay Area cases. They share evidance. They share investigative resources. They share prosecution strategies.

Since 2025, these strike force teams have charged dozens of cases across California. 14 defendants arrested in May 2025 for allegedly obtaining over $25 million in fraudulent loans. A Mid-City Los Angeles woman sentenced to 60 months in prison for $2.3 million COVID loan fraud. A California man pleading guilty to his role in a $15.9 million scheme.

Your not facing an overworked U.S. Attorney who might prioritize bigger cases. Your facing a specialized unit that exists specificaly to find people who defrauded pandemic relief programs.

And 81% of pandemic fraud defendants sentenced as of December 2024 recieved prison time, not probation. Thats the national number. California isnt more lenient.

What Bay Area Sentences Actually Look Like In 2024-2025

Lets talk about real sentences. Not hypotheticals. Actual outcomes from Northern District of California federal courts.

Frank Mosley (Oakland) – 30 months federal prison. Former IRS officer, city tax enforcement officer. $3+ million scheme with co-conspirators.

Christina Burden (Oakland) – 36 months federal prison. $1.14 million obtained through “Blessing Box Co LLC.” Spent on luxury goods.

Lebnitz Tran (San Jose) – Pending sentencing, faces up to 20 years per count. $3.6 million obtained through 34 fraudulent applications.

Cassie Will-Darnell (Santa Clara) – 18 months federal prison. $2.8 million. Claimed 10 employees, had zero.

Miranda Devlin (San Francisco) – 18 months federal prison. $368,800. Shell company named “Common Nucleus of Cancer, LLC.” Also impersonated attorneys.

Reginald Mosley (Sacramento) – 30 months federal prison. Co-conspirator with brother Frank.

Co-conspirators in Mosley scheme – 12 to 18 months federal prison. Lesser roles, lower sentences.

See the pattern? 18 months to 36 months is the range for most Bay Area cases. The differences come from fraud amount, role in the scheme, and whether you cooperated.

The Mosley brothers got identical sentences because they were equally culpable. Miranda Devlin got 18 months despite a smaller fraud amount because she also committed attorney impersonation. Christina Burden got 36 months because of the size of her fraud and the evidance of intent shown by her luxury spending.

The Volume Problem: Why 34 Applications Means Decades In Prison

Lebnitz Tran didnt file one fraudulent PPP application. He filed 27. He also filed 7 fraudulent EIDL applications. 34 applications total.

Each application is a seperate potential count. Each count carries up to 20 years. Volume dosent just increase the fraud amount – it multiplies the charges themselves.

Heres how federal sentencing works. The base offense level comes from the fraud amount. But enhancements come from factors like “more than minimal planning,” “use of sophisticated means,” and “mass marketing.” Filing 34 applications checks every one of those boxes.

The “I made a mistake” defense becomes impossible when you filed 34 applications. A mistake happens once. Maybe twice if your genuinly confused. 34 times is a buisness plan.

If you filed more then one PPP application – even for different buisnesses, even for legitimatley seperate entities – prosecutors can argue a pattern. If the applications contain similar misrepresentations, they can argue a scheme. If you used the same fabricated documents across multiple applications, they can argue sophistication.

The worst cases involve preparers who helped multiple clients. Those preparers kept records. Every client file becomes evidance. Your application, filed through a preparer who processed dozens of fraudulent loans, is sitting in a federal database connected to a known fraud operation.

When Spodek Law Group Takes Your Call

You call 212-300-5196. Someone answers. Not a receptionist. Someone who can actualy discuss your situation.

We understand that if your reading this, your probly terrified. Maybe you havent slept in weeks. Maybe you just learned that someone connected to your PPP application is under investigation. Maybe the FBI left a buisness card. Maybe you recieved a letter from the SBA asking for documentation you know you cant produce.

Heres what working with Spodek Law Group on a Bay Area PPP fraud case actualy looks like:

First, we understand your specific situation. Not generalities. Your loan amount. Your application. Who prepared it. What representations you made. Who else was involved. What communications exist.

Second, we identify where you actualy stand. Is there an active investigation? Has anyone connected to your application been contacted? Are there cooperating witnesses? What physical evidance exists? How strong is the goverments case likely to be?

Third, we explore your options. Should you be proactive? Should you wait? Is cooperation the right strategy? Is there a legitimate defense based on your actual circumstances? What are the realistic outcomes given Bay Area sentancing patterns?

Fourth, we give you a clear picture of what your facing. Best case. Worst case. What factors influence where you fall on that spectrum. What you can do – right now – to improve your position.

This isnt about making promises we cant keep. Its about replacing panic with information. When you understand what your actualy facing, you can make rational decisions instead of freezing into inaction or making it worse.

Todd Spodek built Spodek Law Group on one principle: clients deserve the truth, even when its uncomfortable. Were not going to tell you everything will be fine if it wont. Were going to tell you exactly what we see and help you navigate it.

If your a Bay Area business owner with questions about a PPP loan – whether thats a formal investigation or just growing anxiety about an application you submitted five years ago – call us at 212-300-5196. The consultation is free. The cost of waiting isnt.

FBI San Francisco is contacting 2020 applicants right now. The statute of limitations extends until 2030-2031. Your window to position yourself favorably is closing.

The goverment has years to prosecute you. Your window to protect yourself is much shorter then you think.