Wisconsin PPP Loan Fraud Lawyers.

The PPP allowed loan borrowers the possibility of loan forgiveness in some cases. These loans could be forgiven in whole or in part when borrowers satisfied the applicable requirements of the program. For example, as part of the forgiveness process, a borrower had to prove that PPP proceeds were spent for specific payroll and operating expenses. Applicants also had to show that the funds were used as intended, and they had to certify in good faith that economic uncertainty made the loan request necessary to support ongoing operations. This included showing that the financial assistance was necessary due to the economic uncertainty caused by the pandemic. Along with these substantive requirements, borrowers had to certify that the information they submitted and the supporting documentation they provided were accurate.

Furthermore, when borrowers applied for PPP loan forgiveness, they were required to certify that the information in their forgiveness application and supporting documents was true and correct in all material respects. Because of this, seeking PPP loan forgiveness does not necessarily put an end to federal scrutiny. Wisconsin PPP fraud investigations can end in various ways, and federal authorities can pursue civil and criminal charges against both borrowers and lenders in many cases. The fact that a borrower’s loan may have been forgiven does not put an end to a potential fraud investigation. For borrowers, filing for forgiveness is simply another certification with the federal government, and as a result, it is another opportunity to commit fraud. While an inaccurate loan application can present one set of fraud allegations, an inaccurate certification for loan forgiveness can present an entirely new set of allegations. As a result, while seeking forgiveness is an important step, it is not an assured way to end federal scrutiny, and borrowers must still be prepared to defend their loan applications, loan proceeds usage, and requests for loan forgiveness.

When does a Wisconsin PPP error become fraud?

For borrowers, banks, and other entities that applied for PPP loans, it can be difficult to tell what amounts to a mistake and what amounts to fraud in federal investigations. It is also difficult for borrowers, banks, and other entities to know what evidence investigators are looking for when they are collecting records in order to determine whether or not they should pursue fraud charges. The types of allegations raised in PPP fraud investigations can vary widely, and federal investigators can choose to pursue either civil or criminal charges.

However, in many cases, some common allegations stand out. For example, federal investigators may allege that an applicant overstated its payroll, overstated the number of its employees, overstated its revenue, or lied about its eligibility to participate in the PPP. These are all serious allegations, but a False Claims Act violation generally requires proof that the information was provided knowingly, including with actual knowledge, deliberate ignorance, or reckless disregard. In criminal fraud cases, the government will need to prove both that the applicant provided false information and that it did so with the defendant’s required culpable mental state.

In many cases, federal investigators look at whether an applicant disclosed any affiliated businesses. This is important because the SBA’s affiliation rules determine which entities are considered separate and which are considered as part of the same entity for purposes of PPP eligibility. This analysis can be particularly challenging, as the applicable regulation, 13 C.F.R. section 121.301, covers a wide range of scenarios. In some cases, the analysis is not difficult, and an applicant does not appear to have complied with the regulation on its face. In other cases, the analysis requires careful review of the applicant’s relationship with other entities to see if the relationship rises to the level of affiliation. If it is considered affiliated, then the applicant’s size can be calculated together with the size of the affiliated entity or entities. This calculation may affect the applicant’s eligibility under the PPP. For defendants, showing that the SBA affiliation rules are either inapplicable or inapplicable and that they did not willfully violate them in order to fraudulently obtain funds is an important defense strategy.

Which federal process is investigating the PPP loan?

When you are targeted in a federal PPP fraud investigation, it can be difficult to discern where in the process you are. You may be surprised to find out that federal investigators are comparing your loan application with your forgiveness application, reviewing your bank records, payroll data, tax filings, business formation documents, and conducting interviews with your bank, your employees, or your former business partners. These are all common steps in a PPP fraud investigation. If your loan application showed that you had five employees but your loan forgiveness application showed that you had ten employees, this could lead to questions about your eligibility to apply for PPP funding. Similarly, if your bank records show that you have a number of different businesses, but you did not disclose this on your PPP application, investigators may question whether you have other affiliations that you need to disclose as well.

While these are all aspects of investigation, these investigations are being conducted by the SBA Office of Inspector General. This office conducts both audits and investigations. These audits can be the first step in a PPP fraud inquiry, and investigators will use any information that they gather during their audit to pursue further allegations in a fraud inquiry. While auditors are required to maintain confidentiality, they may pass information to investigators at the SBA Office of Inspector General. As a result, if you are subject to an audit for your PPP loan, you should be prepared to defend yourself against potential fraud charges, and you should retain a knowledgeable attorney who can advise you about your next steps.

Todd Spodek represented the juror at the centre of the challenge to the Ghislaine Maxwell verdict.

How can civil and criminal PPP claims affect exposure?

When federal investigators investigate suspected PPP fraud, they must determine whether to seek civil or criminal charges. While PPP fraud can lead to both types of charges, most federal investigations typically pursue either civil or criminal penalties based on the available evidence.

In most federal PPP fraud investigations, federal investigators seek civil penalties under the False Claims Act (FCA), a federal law that prohibits (among other things):

• Knowingly presenting a false, fictitious, or fraudulent claim for payment or reimbursement from the federal government,
• Knowingly presenting a false, fictitious, or fraudulent record, statement, or document in material connection with a false, fictitious, or fraudulent claim for payment or reimbursement from the federal government,
• Knowingly making, using, or causing to be made or used a false record or statement material to an obligation to pay or transmit money or property to the federal government, or knowingly concealing or knowingly and improperly avoiding such an obligation, and
• Conspiring to violate the FCA’s civil fraud provisions.

The FCA provides for several remedies for the government in the event of a civil violation, including:

• Treble damages in many cases, which is three times the amount of the qualifying loss the federal government incurred,
• A civil penalty per claim, which is adjusted for inflation under federal law. Currently, the civil penalty under the FCA is between $14,308 and $28,618 per claim.

In criminal cases, PPP fraud can lead to fines, forfeiture, probation, and prison time. While criminal PPP fraud charges generally require more proof to establish the defendant’s intent than civil fraud charges under the FCA, the penalties for criminal PPP fraud can be far more severe. Criminal PPP fraud charges often involve criminal conspiracy, wire fraud, and bank fraud, and they can lead to prosecution under the federal government’s asset forfeiture laws as well. In a criminal case, it is also important to remember that the prosecution must prove every element of every charge. When facing criminal prosecution, you must put your defense at the forefront of your strategy.

What records and losses shape a Wisconsin PPP defense?

The record in a federal PPP fraud case is what makes the case, and an important part of a defendant’s strategy should be focused on showing that the government has made mistakes. Even if the government has made mistakes, it will likely seek to pursue its claims, and, for defendants, one area that requires particular attention is showing that they do not owe the government the amount of damages that the government alleges. This includes showing that they have legitimately used their PPP loan proceeds for purposes that qualify under the PPP, and it can also include demonstrating that the government has miscalculated the loan loss amount.

In civil cases, reducing the government’s claimed loss amount is an important way to mitigate damages exposure. In criminal cases, reducing the government’s claimed loss amount is an important part of a defendant’s defense strategy as well. The amount of the loss can affect the U.S. Attorney’s sentencing-guideline recommendations after conviction, and it can also affect the government’s decision to seek restitution, forfeiture, repayment, or civil damages in addition to criminal penalties.

Additionally, all parties involved in federal PPP fraud cases must be extremely cautious about destroying or altering records when they learn of an investigation. While altering or destroying records can be a bad decision even in non-fraud cases, it can create serious concerns in criminal fraud cases. It is critical that businesses and individuals preserve all existing records and avoid any attempts to reorganize or alter documents that are responsive to the government’s records request. In many cases, just taking an extra few minutes to organize your records can trigger accusations of altering or destroying evidence during an active federal investigation. This is not an issue that businesses and individuals should take for granted, and they must be vigilant in ensuring that they do not compromise their fraud defense strategy by engaging in conduct that may lead to additional federal penalties.

Calling About Someone You Love

Most first calls to a defense firm come from a family member rather than the person under investigation. If that is you, Spodek Law Group answers its phone at any hour, and families retain the firm on a relative's behalf every week. Reach it at 888 348 8028.