Utah PPP Loan Fraud Lawyers.

Utah PPP borrowers and companies that have received forgiveness approval may mistakenly believe that they are safe from prosecution. However, forgiveness approval does not preclude future investigation and prosecution for allegedly false loan or forgiveness submissions. In fact, in some cases, forgiveness approval may raise suspicions when loan recipients provide contradictory and/or misleading information to justify their use of loan proceeds to the government.

What evidence of fraud are federal investigators looking for in Utah?

Relevant evidence of fraud can be found in a loan recipient’s loan application and loan forgiveness request, bank records, payroll documentation, tax records, and communications with third-party lenders. With this evidence in hand, federal investigators can determine if there are grounds to bring a fraud case and what offenses federal prosecutors might pursue.

How do federal investigators build cases against PPP loan recipients?

One common way that federal investigators can build cases against Utah PPP loan recipients is by comparing a recipient’s loan application with the recipient’s request for loan forgiveness. Discrepancies in payroll and other key areas can easily be the basis for allegations that a loan recipient lied about the purpose or necessity of the loan. With this evidence, federal investigators will then make a determination to take the case to a federal prosecutor.

Which law enforcement agencies can investigate alleged fraud in Utah?

While the Small Business Administration OIG investigates a wide range of fraud, the FBI, IRS Criminal Investigation (IRS-CI), Department of Justice (DOJ), and other law enforcement agencies can also investigate alleged federal crimes involving PPP funds in Utah. As a result, Utah PPP borrowers and companies that may be facing charges must realize that fraud allegations can quickly lead to an investigation targeting all financial records, bank accounts, and business communications.

Can federal prosecutors pursue both civil and criminal charges?

Yes, federal prosecutors can pursue both civil and criminal charges based on the same evidence. In a typical case, DOJ attorneys will review a case’s evidence and identify the potential penalties that can be enforced. Based on this information, they will then decide whether to pursue criminal litigation, civil litigation, or both.

What are the different types of federal offenses?

PPP fraud and EIDL fraud are two examples of different federal criminal offenses that have distinct requirements (or “elements”) that prosecutors must be able to support with admissible evidence. Along with these, the Bank Fraud, Wire Fraud, and Money Laundering statutes can also be used by prosecutors to target alleged fraud under the PPP and other pandemic relief programs.

Which Utah PPP notice did you receive, and what does it require?

A target letter is a letter sent by the DOJ stating that a recipient has become the target of a criminal investigation. If you receive a target letter, you need to get in touch with a skilled federal defense lawyer immediately. A grand-jury subpoena can also have criminal fraud implications, but this is slightly different. With a target letter, you may be on the cusp of criminal charges. With a grand-jury subpoena, a federal grand jury is demanding documents and records as part of its investigation into potential criminal conduct. A grand-jury subpoena can be served even if you are not being charged with a crime and if there is no evidence of your involvement in alleged criminal conduct.

A Civil Investigative Demand is similar to a grand-jury subpoena. However, it signals a civil fraud investigation, which falls under the False Claims Act. If you receive a Civil Investigative Demand, you will need to focus your defense efforts on avoiding civil liability.

If federal agents have executed a search warrant at your home or office, you must immediately take action to preserve all of your records and refrain from attempting to alter or delete information. While your defense counsel works to challenge the search warrant, you should refrain from talking with your employees about the investigation, as employees’ discussions after being served with a search warrant can create issues with witness coordination. You should also refrain from communicating with anyone else implicated in the alleged fraud.

If you believe you are the victim of identity theft, then you may not be facing charges, and your best course of action may be to report the fraudulent application to the SBA-OIG immediately.

Contact an Experienced Utah PPP Fraud Defense Lawyer to Discuss Your Situation

Make sure to contact a skilled defense lawyer to discuss your situation, the nature of the investigation, and what steps you should take next. We can help you make informed decisions, and we can defend you against the federal government if necessary. Reach out to our attorneys today to get started.

How do Utah investigators distinguish PPP eligibility, affiliation, and EIDL misuse?

Fund Misuse

When federal agents say you’re under investigation for “misuse” of PPP loan proceeds, this typically means you’re being accused of either (i) using loan proceeds for prohibited personal expenses or (ii) miscategorizing certain expenses as qualifying “eligible expenses” under the PPP program.

As a result, if you’re facing allegations of fund misuse, you will need to determine whether these allegations involve a criminal or civil matter. If you’re facing allegations of criminal fraud, you will need to focus your defense efforts on ensuring that federal prosecutors cannot prove your fraud liability.

Criminal Fraud

Criminal fraud is different from mere misuse of loan proceeds. While misuse involves violations that are either civil or criminal in nature, criminal fraud allegations carry the possibility of federal imprisonment. In order to pursue criminal fraud charges, federal prosecutors must be able to prove the required knowledge and intent elements of the offense for which you’re being charged.

Inaccurate Application

An inaccurate application does not automatically prove a borrower’s criminal liability. Prosecutors must prove the knowledge and intent elements of the specific offense charged in order to establish criminal liability. As with other federal offenses, this requires showing proof beyond a reasonable doubt.

SBA Affiliation

To make informed decisions regarding your business’s eligibility to receive PPP loan proceeds, the SBA has promulgated regulations that borrowers need to understand. 13 C.F.R. § 121.301 provides a comprehensive overview of affiliation for business purpose and size. When determining a borrower’s eligibility to receive PPP loan proceeds, Utah federal investigators may look at the borrower’s (i) relationship with any affiliated companies, (ii) relationship with any affiliated owners or owners’ family members, and (iii) relationship with any affiliated companies’ owners or owners’ family members.

Affiliation Analysis

As part of this affiliation analysis, investigators may conclude that a borrower should be counted as being affiliated with another business. The determination of whether two companies are affiliated will then depend on the borrower’s and the other company’s control and relationship. As a result, if an applicant or company is deemed to be affiliated with another entity, they may be deemed too large to qualify for PPP loan proceeds.

SBA Alternative Size Standard

Under the SBA’s alternative size standard, a business concern could qualify for PPP loans if, together with its affiliates, it had tangible net worth of not more than $15 million and average net income after federal income taxes, excluding carry-over losses, of not more than $5 million for the two full fiscal years before the application.

What federal charges, deadlines, and Utah-specific consequences can follow?

Wire Fraud (18 U.S.C. § 1343)

18 U.S.C. § 1343 makes it a federal crime to devise, attempt to devise, or intend to devise a scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, and execute such scheme by means of wire transmissions (such as the internet or phone).

Bank Fraud (18 U.S.C. § 1344)

18 U.S.C. § 1344 prohibits executing or attempting to execute a scheme to defraud a financial institution or to obtain any of the monies, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution by means of false or fraudulent pretenses, representations, or promises.

False Statements (18 U.S.C. § 1014)

18 U.S.C. § 1014 is a federal statute that prohibits knowingly making false statements or representations in connection with an attempt to influence the action of or obtain any loan or other benefit from a financial institution (including one that is federally insured or affiliated with a federally insured institution).

Conspiracy (18 U.S.C. § 371)

18 U.S.C. § 371 makes it a federal crime for two or more individuals to conspire to commit an offense against the United States or to defraud the United States, if one or more conspirators commits an act to effect the object of the conspiracy. In most PPP fraud cases, conspirators are prosecuted under the relevant fraud statute as well, in addition to 18 U.S.C. § 371.

Ultimately, federal charges involving PPP fraud cases can lead to steep financial penalties and federal imprisonment. For example, bank fraud carries a maximum sentence of 30 years in federal prison, whereas wire fraud generally carries a maximum sentence of 20 years, but § 1343 provides a 30-year maximum when the offense affects a financial institution or involves a declared major disaster or emergency. False statements carry a maximum sentence of 30 years, and conspiracy carries a maximum sentence of 5 years.

The False Claims Act

The False Claims Act is a federal statute that allows the federal government to seek civil recovery for knowingly submitting false claims or making material false statements, among other conduct defined by the Act. Under the False Claims Act, companies and individuals may be held liable for conduct that satisfies the Act’s statutory elements, regardless of which underlying program or transaction is involved. Defendants’ financial penalties in PPP fraud cases involving the False Claims Act may include treble damages-three times the damages sustained by the government-plus inflation-adjusted civil penalties of up to $28,619 per violation.

Contact a Federal Criminal Defense Attorney

Nothing here is legal advice, and the details of your case matter. Todd Spodek and Spodek Law Group take federal criminal and white collar cases nationwide, from offices in New York, Brooklyn, Queens and Los Angeles. You can reach the firm at 888 348 8028.