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PPP and EIDL Loan Fraud Lawyers

Protecting Your Company Against PPP and SBA EIDL Loan Fraud Allegations: What You Need to Know

Introduction

The COVID-19 pandemic impacted an incredible number of individuals and businesses throughout the United States. To relieve financial turmoil caused by the pandemic, the federal Government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, establishing the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program through the Small Business Administration (SBA). However, it has been allegedly noted that billions of dollars were disbursed with little oversight, creating opportunities for possible fraudulent activities. As a result, the Internal Revenue Service (IRS), Federal Bureau of Investigation (FBI), Secret Service, Department of Justice, and other law enforcement agencies have been actively involved in investigations related to loan recipients who may have received fraudulent PPP loans or the funds provided via EIDL program loans.

PPP Loan Fraud

The PPP loan scheme sought to provide financial assistance to small and medium-sized businesses affected by the pandemic. Nonetheless, due to its limited eligibility requirements and inadequate oversight at that time, the PPP was highly susceptible to fraud, leading to the current crisis where numerous individuals and businesses are being investigated by law enforcement agencies for possible PPP loan fraud. For example, law enforcement agencies investigate companies that fraudulently applied for a PPP loan, improperly received multiple loans from different lenders, materially misrepresented information on their initial PPP loan application, or wrongly used loan funds for illegal purposes. The last point is crucial here as federal investigators intend to pursue criminal charges against any company using PPP loan funds contrary to statutory guidelines.

SBA EIDL Fraud

The SBA EIDL program is another source of funding established through the Small Business Administration (SBA). Similar to PPP loans, however, It is subject to potential fraud allegations under various scenarios. Unintentional errors or deliberate misinformation may lead to wrongful receipt of federal funds via EIDL fraud. The federal investigators are not limited to examining unjustified expenses, but also misused use of PPP and SBA EIDL loan funds. Engaging individuals or companies in criminal conduct with regard to the EIDL program will lead to similar consequences as those who allegedly engaged in fraudulent PPP activities.

The Criminal Implications of PPP and SBA EIDL Loan Fraud

PPP and SBA EIDL fraud fall under the general term “fraud,” which can encompass both civil and criminal offenses. Federal laws are broad enough to trace fraudulent practices related to loans obtained from government programs, including multiple loans from different lenders by the same applicant, false representations about a company’s payroll or classification of employees, or false certifications that the funds were entirely used for eligible business purposes. Under pre-existing criminal statutes (e.g., False Claims Act, Making False Statements to SBA or an FDIC-Insured Bank, Bank Fraud, Wire Fraud, Aggravated Identity Theft, Tax Evasion, Making False Statements to Federal Agents, etc.), possible penalties for those accused of PPP or SBA EIDL fraud include hefty fines or lengthy prison sentences that often exceed a decade (depending on the severity of the crime).

Mitigating Risk in Criminal Loan Fraud Investigations

When facing an investigation involving allegations of PPP/SBA EIDL loan fraud, it is essential to hire experienced attorneys at a law firm specializing in federal criminal defense immediately. Proactive defense strategies focusing on evidence and specific allegations will aid mitigate the risk assessments while protecting your rights against self-incrimination. A comprehensive and custom-tailored defense strategy should be developed that will involve identifying relevant evidence, assessing potential risks from an attorney-client privileged internal assessment, and engaging with federal agents to establish why prosecution may be unwarranted. By steering the investigation toward a favorable resolution, you can avoid being charged criminally altogether.

Conclusion

As the COVID-19 pandemic continues to cause turmoil, law enforcement authorities are actively investigating companies that may have received fraudulent PPP loans or those receiving funds illegally from the EIDL program. To prevent wrongful prosecution or criminal charges, a comprehensive legal defense by an experienced federal criminal defense lawyer is essential in assessing risks and avoidingcriminal charges. This defense involves a complete analysis of the evidence, investigation of the specific allegations put forward by law enforcement agencies, and evaluating legal options for protecting your rights during the investigation process.

The bottom line is that if you or your company is under investigation or prosecution for PPP or SBA EIDL loan fraud, it is crucial to take immediate action to protect your rights and achieve a favorable outcome. Only an experienced federal criminal defense attorney can help guide you through this complex process and ensure that your rights are protected throughout the investigation, indictment, and any subsequent trial or plea bargain negotiations. Don’t wait until it’s too late; seek experienced legal representation early in the process to give yourself the best chance of success.

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