What Are the Federal Charges for PPP Loan Fraud?

What Are the Federal Charges for PPP Loan Fraud?

You probably think you know what you’re facing. One charge, maybe two. Something called “fraud” with a number next to it. What most people don’t realize – and what nobody tells you until it’s too late – is that federal prosecutors don’t charge you based on what you did. They charge you based on how much leverage they want over you. One PPP loan application can generate five, ten, sometimes fifteen separate federal charges. The same conduct, charged multiple ways, stacked on top of each other. This is by design.

Welcome to Spodek Law Group. Our goal is to give you real information about PPP fraud charges – not the sanitized version you find everywhere else. We put this on our website because most people have no idea how this actually works until they’re sitting across from a federal prosecutor who’s explaining why they’re looking at decades instead of years. Thats not the moment you want to learn how federal charging works. By then the leverage equation is already locked in against you.

The Charge-Stacking Reality Nobody Explains

Here’s the thing about federal prosecution that defense attorneys understand but rarely explain publicly. The government doesn’t have to pick one charge. They can charge you with wire fraud for submitting the application electronically. Bank fraud for the deposit hitting your account. False statements for each certification you signed. Money laundering for spending the money afterward. And if you used anyone else’s identity information – even with their permission – aggravated identity theft with mandatory consecutive sentences.

The CARES Act itself contains no criminal provisions. Read that again. The PPP program has no built-in penalty structure. Instead, prosecutors reach for every existing federal fraud statute and apply them to your conduct. Each statute carries its own maximum sentence. And heres the kicker – judges can make those sentences run consecutively, not concurrently.

Todd Spodek has handled hundreds of federal fraud cases, and he’ll tell you the same thing he tells every client who walks through the door: the number of charges has nothing to do with how “bad” your conduct was. Its about leverage. A $50,000 PPP loan can generate the same number of charges as a $5 million scheme. The person who applied for one fraudulant loan and bought a Rolex faces the same charging structure as the person who ran a multi-million dollar conspiracy. The difference isnt in the crimes – its in the leverage equation.

Prosecutors know most defendants will plead guilty. The 93% federal conviction rate comes largely from plea agreements, not trials. So they front-load the pressure. Stack enough charges to make the theoretical maximum sentance absurd – 200 years, 300 years, 400 years – and suddenly their “generous” plea offer of 5-7 years looks reasonable. Thats the psychology theyre exploiting. And it works.

Wire Fraud: How One Email Becomes Multiple Federal Counts

18 USC 1343 is the wire fraud statute. Maximum penalty: 20 years per count, or 30 years if the fraud affects a financial institution. Every single electronic communication you used during the application process can be charged as a seperate count of wire fraud.

Think about what that means. You submitted your application online. Thats one count. You sent an email to the lender. Thats another count. The funds transfered electronically to your account. Thats a third count. You sent a follow-up email about forgiveness. Fourth count. The lender sent you an electronic confirmation. Fifth count. The money moved between bank accounts. Sixth count.

Weve seen cases were defendants faced 20-count indictments for just three loan applications. The prosecutor isnt charging you twenty times because you did twenty things wrong. Their charging you twenty times becuase they want you to plead guilty. And when your staring at 400 years of theoretical exposure, most people do exactly that. Their not thinking about whether they actualy have a defense. Their thinking about their kids, their spouse, their aging parents. Their thinking about what happens if they roll the dice and lose.

The wire fraud statute requires prosecutors to prove you acted “knowingly and willfully” with intent to defraud. Thats an important element. But when your facing enough counts to spend multiple lifetimes in prison, the technical elements of each charge start feeling less important then the practical reality of your situation. Defense becomes a luxury you feel like you cant afford.

This is why you need representation before charges are even filed. The charging decision itself – which counts to include, how many to stack – happens before you ever see an indictment. By the time your reading the document, the leverage game is already over.

Bank Fraud: The 30-Year Statute That Anchors Everything

Bank fraud under 18 USC 1344 carries up to 30 years per count and a $1 million fine. Prosecutors love this charge becuase the sentencing guidelines for bank fraud are particulary harsh. If you obtained money from a bank through false pretenses – which is basicly the definition of PPP fraud – your looking at bank fraud charges.

Heres what makes bank fraud different from wire fraud in practice. The bank fraud statute specifically targets “schemes to defraud financial institutions.” Since PPP loans were processed through SBA-approved lenders – banks – every fraudulent application satisfies the elements of both wire fraud AND bank fraud. Same conduct, two different charges, two different maximum sentences that can run consecutively.

The federal sentancing guidelines calculate your offense level based partly on the amount of loss. For bank fraud, that calculation is esspecially punitive. A loss of $150,000 to $250,000 adds 12 levels to your base offense. Those levels translate directly into months of imprisonment. The higher the loss, the higher the offense level, the longer the reccommended sentence.

OK so now your probably thinking: cant they only charge me once for the same thing? No. Thats not how federal law works. The Supreme Court has said prosecutors can charge seperate statutory violations arising from the same conduct. Double jeopardy doesnt apply until after conviction. Before trial, they can stack as many charges as they want.

And they do. Regulary. In almost every PPP fraud prosecution. A single application that generated a $100,000 loan can result in charges of wire fraud (for the electronic submission), bank fraud (for defrauding the lender), false statements (for the certifications), and potentially money laundering (for spending the proceeds). Four different statutes, four different maximum penalties, all from one application.

False Statements: The Certification Trap

Heres a charge most people dont even think about until their staring at an indictment. 18 USC 1014 makes it a crime to make false statements to a financial institution. Maximum penalty: 30 years. Every certification you signed on that PPP application is a potential count under this statute.

When you submitted a PPP application, you certified several things. You certified your business was operational. You certified your employee count was accurate. You certified you would use the funds for approved purposes. You certified you understood the program requirements. Each certification thats proven false becomes a seperate potential charge.

The “willfulness” requirement for false statements is lower then most people expect. Prosecutors dont have to prove you knew you were committing a crime. They have to prove you knew the statement was false when you made it. Thats a much easier bar to clear.

At Spodek Law Group, weve seen clients who genuinly beleived their applications were accurate at the time. They relied on bad advice from preparers. They misunderstood program requirements that the SBA itself was unclear about. They made mistakes on employee counts or payroll calculations. But prosecutors dont care about your subjective belief. They care about whether the numbers on the application matched reality. If they didnt, your facing false statement charges regardless of your intent.

Aggravated Identity Theft: The Mandatory Consecutive Nightmare

This is were things get truely terrifying. 18 USC 1028A – aggravated identity theft – carries a mandatory minimum two-year sentence. Mandatory means the judge has no discretion. If your convicted, you serve two years. Period.

But heres the part that makes defense attorneys lose sleep. That two-year sentence must run consecutive to any other sentence. Not concurrent. Consecutive. And if theres multiple counts of identity theft, each two-year sentence stacks on top of the others.

Lets say you used three employees Social Security numbers on your PPP application. Thats three counts of aggravated identity theft. Six mandatory consecutive years before you even get to the fraud charges. Ten employees? Twenty mandatory years. And these are mandatory minimums – the judge cant go below them no matter how compelling your circumstances.

The identity theft statute applies even when the person whose information you used gave you permission to use it. Doesnt matter. If you used someone elses identity document or information “in relation to” certain predicate crimes – and wire fraud and bank fraud are both predicates – you face mandatory consecutive time.

The stacking effect makes identity theft counts the most powerfull leverage prosecutors have. Defendants facing multiple identity theft counts are under enormous pressure to plead guilty and accept dismissal of some counts in exchange for a guilty plea to the underlying fraud. A typical plea offer might involve pleading to one count of bank fraud and one count of identity theft, with the remaining counts dismissed. Your mandatory minimum drops from ten years to two. That’s alot of pressure to take a deal – any deal.

Think about the psychology of that. Your facing 20 years mandatory before you even get to the fraud sentencing. The prosecutor offers to drop most of the identity theft counts if you plead guilty. Suddenly your looking at 2 years mandatory plus whatever the fraud sentence turns out to be. Thats not a negotiation – thats coercion by math.

Money Laundering: When Spending Your Own Loan Becomes a Crime

Money laundering under 18 USC 1956 and 1957 adds another layer of charges. Heres the irony that gets most people: you obtained money fraudulantly, then you spent it. The spending itself – the “laundering” – becomes a seperate crime.

Each transaction can be a seperate count. Bought a car? Money laundering. Paid rent? Money laundering. Transfered funds to another account? Money laundering. The statute dosent care that the money was already illegally obtained. Moving it afterwards just gives prosecutors more charges to stack.

At Spodek Law Group, we see this pattern constantly. Client comes in thinking they might face one or two fraud charges. Once we review the case, we’re explaining that every major purchase, every transfer, every payment they made could be a seperate money laundering count. Each one carries up to 20 years.

The money laundering statutes have their own sentencing enhancements. If the transactions total more then $200,000, add 4 levels. More then $400,000, add 6 levels. More then $1,000,000, add 8 levels. These stack on top of whatever your fraud offense level already is.

Think about that. You obtained a fraudulant $150,000 PPP loan. Then you spent it over eighteen months on various expenses. The government could theoreticaly charge you with dozens of money laundering counts on top of the underlying fraud. Hundreds of years of theoretical exposure from spending money you shouldnt have had in the first place.

The Sentencing Reality: 2024-2025 vs Earlier Years

Let that sink in. Defendants sentenced in 2024-2025 are recieving prison terms 40% longer on average then defendants sentanced in 2021-2022 for identical conduct. The judges got the message. Congress extended the statute of limitations to ten years specificaly so prosecutors could take their time and make examples of people.

The era of probation for PPP fraud is esentially over. Even small amounts – $50,000, $75,000 – are resulting in prison time. Federal judges are sending a message that pandemic relief fraud wont be tolerated, and their doing it by handing out harsher sentences then anyone expected.

In 2021, you might have gotten probation for a $100,000 PPP loan fraud. In 2025, your looking at 18-36 months minimum. For the same conduct. The sentancing guidelines havent changed. What changed is judicial attitude.

Heres the thing about federal sentencing that most people dont understand. The guidelines are advisory, not mandatory. Judges have discretion. And right now, thier using that discretion to impose above-guideline sentences in PPP fraud cases. The median time from investigation to indictment compressed from 8-12 months to 4-6 months. Their moving faster and punishing harder.

Several factors are driving this shift. First, theres been massive public attention to pandemic fraud. Judges read the news. They know voters are angry about people who stole relief money during a national emergency. Second, the sheer volume of PPP fraud cases has overwhelmed the system. Judges are seeing the same schemes over and over – fake employees, inflated payroll, shell companies – and their patience has worn thin. Third, the Department of Justice made pandemic fraud a top priority. That pressure flows down to individual prosecutors who need convictions and sentences they can report up the chain.

What This Actually Means for Your Defense

By now you understand why charge-stacking matters. Its not about justice – its about leverage. The government wants you to plead guilty, and they’ll pile on as many charges as necesary to make trial seem suicidal. A 20-count indictment with 300 years of theoretical exposure becomes a plea deal for one count with a 5-year cap. Most people take that deal even if they have valid defenses.

This is why Spodek Law Group exists – to get involved before the charging decision. Once your indicted, the leverage game is already tilted against you. But before indictment, during the investigation phase, theres still room to influence which charges get filed and how many counts appear in the indictment.

A proactive defense strategy might include:

• Voluntary disclosure to reduce obstruction exposure
• Demonstrating inability to pay restitution (affects charging decisions)
• Negotiating with the US Attorneys office before indictment
• Building mitigation evidence for sentencing if charges do come
• Documenting good faith reliance on professional advice
• Gathering character evidence and community impact letters early

The window for these strategies closes once your indicted. After that point, your options narrow dramaticaly. The charges are set. The leverage is established. Your negotiating from weakness instead of from a position where you still have something to offer.

Call Spodek Law Group at 212-300-5196 before you talk to anyone else. The consultation is free. The mistake of waiting isnt.

Todd Spodek always tells clients the same thing: the worst time to hire a federal defense lawyer is after your indicted. By then, the charges are set, the leverage is established, and your negotiating from weakness. The best time to get involved is when your first suspect somethings wrong – when the FBI leaves a business card, when a witness mentions theyve been interviewed, when your bank account gets frozen without explanation.

Most people wait too long. They think maybe it will go away. They think maybe the investigation isnt about them. They think maybe they can explain things on their own. By the time they realize they need help, the government has already made its charging decisions. The leverage equation is already locked. The negotiation is already over.

Dont wait until your reading an indictment to find out how many charges their stacking against you. By then, its already to late to change the game.

Sources:

• 18 U.S.C. § 1343 – Wire Fraud
• 18 U.S.C. § 1344 – Bank Fraud
• 18 U.S.C. § 1014 – False Statements to Financial Institutions
• 18 U.S.C. § 1028A – Aggravated Identity Theft
• 18 U.S.C. § 1956 – Money Laundering
• USSC Federal Sentencing Guidelines
• DOJ COVID-19 Fraud Enforcement