South Dakota PPP Loan Fraud Lawyers.

Although federal assistance programs like the PPP can present opportunities, they also pose substantial risks. Facing accusations of fraudulent loan activities from federal agencies requires an experienced federal defense team. Spodek Law Group can provide the strategic guidance and legal defense necessary to navigate these complex allegations, focusing on protecting your reputation, livelihood, and freedom throughout the process.

South Dakota PPP loan fraud cases are prosecuted at the federal level by the United States Department of Justice (DOJ) and participating U.S. Attorneys’ Offices. Several federal agencies are involved in investigating and referring suspected cases:

• Federal Bureau of Investigation (FBI)
• Internal Revenue Service Criminal Investigation (IRS CI)
• Office of Inspector General (OIG) of the U.S. Small Business Administration (SBA) These agencies work together to identify suspected fraudulent activities, often utilizing advanced auditing and investigative tools to examine loan applications, financial records, and payroll documentation.

The federal government prosecutes PPP loan fraud under a variety of criminal statutes. The most commonly used statutes include:

• 18 U.S.C. § 1343: This statute covers wire fraud and generally allows for a maximum twenty-year prison sentence, but a violation involving a presidentially declared major disaster or emergency, such as PPP fraud, may carry up to thirty years of imprisonment.
• 18 U.S.C. § 1344: This statute covers bank fraud and allows for up to thirty years of imprisonment.

Other relevant statutes may also be utilized depending on the specific nature of the allegations.

Despite the ability to pursue severe penalties, federal prosecutors must prove the elements of criminal fraud beyond a reasonable doubt. This high standard of proof is a critical defense consideration, particularly in cases where the underlying issues are complex. Our team thoroughly analyzes the evidence against our clients, seeking any deficiencies or misinterpretations that may lead to an unjust prosecution.

Federal Charges Do Not Always Result in Convictions At Spodek Law Group, we represent individuals in criminal cases involving PPP loan fraud. Our legal strategies are tailored to each client’s unique situation, and we work diligently to ensure a comprehensive defense is in place from the outset.

When facing federal charges, it is crucial to understand that accusations do not automatically lead to convictions. Federal prosecutors must establish criminal intent, not just receipt of assistance, to secure a guilty verdict. By scrutinizing the government’s case, we seek to identify potential defenses.

How Do South Dakota PPP Investigations Move from Agent Contact to Indictment?

At Spodek Law Group, we assist South Dakota business owners and other individuals facing the risk of federal PPP loan fraud allegations. When you engage our experienced federal defense attorneys, we will be available to help at each stage of the investigation process, including:

Request for Interview, Subpoena, Search Warrant, or Grand-Jury Testimony

Grand-Jury Target Letter

Right to Decline Investigative Questioning and Demand Counsel

Request to Preserve (or Prohibition Against Altering) Records

Request for Documents in Response to a Subpoena or Search Warrant

Investigation of Loan Certification Truthfulness

Review of SBA Application, Approval, and Audit History

Grand-Jury Testimony

Criminal Charges (Indictment)

During the investigation phase, federal agents with the FBI, SBA Office of Inspector General (OIG), and other federal agencies will be looking to obtain information through a variety of means. If you are the recipient of a search warrant, subpoena, or grand-jury target letter, it will be critical that you engage experienced federal defense counsel promptly.

The grand-jury target letter is particularly important. It means that the federal prosecutors themselves (not just agents at the FBI or SBA OIG) are thinking that you are the possible target of their investigation. Again, you must not hesitate to engage experienced counsel promptly upon receipt of this letter.

How Do South Dakota PPP Investigations Move from Agent Contact to Indictment?

At Spodek Law Group, we provide South Dakota clients with seasoned defense representation at each and every stage of their PPP fraud investigations. Our federal defense attorneys will proactively work to protect our clients’ interests during the grand-jury process, with a focus on avoiding indictment and securing a favorable outcome.

How Should You Interact With the FBI or Other Federal Investigative Agents?

South Dakota individuals and businesses should be cautious when interacting with FBI or other federal agents during PPP fraud investigations. You have the right to decline requests for interviews and may demand to have counsel present before answering questions. Importantly, you must not destroy or conceal any documents that the government requests or seeks to obtain through legal means; this behavior can create additional criminal exposure related to the obstruction of justice.

You have the right to have experienced federal defense counsel assist with all aspects of the investigative process. At Spodek Law Group, we will work diligently to protect your interests while you engage with the government.

Does South Dakota have a state False Claims Act for PPP loans?

The federal government pursues civil PPP fraud allegations under the federal False Claims Act (FCA) codified at 31 U.S.C. §§ 3729 through 3733. The FCA imposes liability on individuals and businesses who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” by the federal government. As Spodek Law Group’s defense attorneys can explain, the definition of “knowingly” in the context of the FCA includes actual knowledge, but it also includes scenarios where individuals or businesses: - Act in deliberate ignorance of the truth;

• Act in reckless disregard of the truth; or
• Act in deliberate ignorance of a law, regulation, or contractual requirement. In other words, the government only needs to prove that the recipient of a PPP loan, “mean that a person, with respect to information-(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information” or that they “mean that a person, with respect to information-(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information” The False Claims Act imposes civil liability for three times the government’s actual loss (treble damages) plus civil monetary penalties that are adjusted for inflation. As adjusted for inflation, the False Claims Act civil penalty is not less than $14,308 and not more than $28,619 per false claim. Our research doesn’t indicate the existence of a South Dakota state-level equivalent of the False Claims Act. This means that in South Dakota, business owners and others facing scrutiny over their loan applications and use of PPP funds need to be concerned about potential civil liability under the federal FCA. Whether South Dakota PPP applicants face federal criminal prosecution or federal civil prosecution depends on a number of factors. It is important to note that federal prosecutors can pursue both criminal charges and civil FCA liability in parallel. This does not mean that facing criminal charges mitigates the risk of civil exposure. When seeking to avoid a federal indictment, business owners and others must also take a strong defense posture against civil FCA liability.

Can Repayment or PPP Forgiveness Erase My (or My Company’s) Fraud Exposure?

PPP Loan Forgiveness and Permitted Uses

The PPP loan program provided relief for businesses during the COVID-19 pandemic by funding payroll, interest on rent and mortgages, utilities, and several other specific operating costs.

• Payroll costs (including benefits)
• Interest on rent and mortgages
• Utilities (including electric, gas, water, electricity, and internet)
• Other costs necessary to maintain operations

Forgiveness was dependent on verifying eligibility and proving compliance through accompanying documentation.

Risks of PPP Loan Forgiveness

When seeking loan forgiveness, PPP applicants and their businesses were required to certify that they met the program’s eligibility requirements and used the loan funds appropriately. The forgiveness application process involved providing supporting documentation, including payroll records. Forgiveness could be granted based on the lender’s decision and was subject to SBA review; borrowers had to certify that the information submitted was true and accurate.

Businesses and individuals who improperly received loans, used PPP funds for ineligible purposes, or falsely certified their program eligibility may be subject to criminal or civil prosecution. As the DOJ’s website notes, “Many businesses that received PPP loans also received funds through other CARES Act programs, particularly the Economic Injury Disaster Loan (EIDL) program, and then falsely certified their eligibility for these programs in order to improperly obtain PPP forgiveness.”

The Impact of Loan Loss Amount, Repayment, and Restitution

The Impact of the Loss Amount on Prosecutorial Interest and Sentencing

The loss amount is a critical factor in determining both the government’s interest in pursuing charges and the potential penalties in a case. Federal prosecutors focus heavily on high-dollar fraud allegations, and defendants who improperly obtained large amounts from the federal government can expect more aggressive prosecution. The loss amount also plays a significant role in sentencing, as the Federal Sentencing Guidelines often recommend harsher sentences when the amount involved in the fraud is substantial.

The Role of Restitution and Civil Liability

Restitution is a measure intended to compensate victims, in this case, the federal government, for the actual losses incurred. While paying restitution is a legal requirement in many cases, it is fundamentally different from civil liability under the False Claims Act. The FCA allows the government to recover not only the original fraud amount but also substantial penalties and treble damages. Therefore, even if a defendant makes full restitution to the victims, the government may still pursue civil damages and penalties through the FCA, which do not disappear simply because restitution was paid.

Speak With Counsel Before You Answer Anything

If agents have contacted you, the order matters: counsel first, answers second. Spodek Law Group has been practicing since 1976 and defends federal matters nationwide, coast to coast, from offices in New York, Brooklyn, Queens and Los Angeles. Call 888 348 8028.