Why PPP Fraud Is in the Spotlight Now
During the height of the pandemic, the federal government issued over 800 billion dollars in Paycheck Protection Program (PPP) loans to help 11 million businesses keep workers employed. The speed at which funds were distributed meant that oversight was limited. Now that the program has ended, federal agencies are aggressively investigating borrowers for signs of fraud. Many business owners who applied for loans in good faith are learning that their applications are under scrutiny years later.
Why Individuals and Businesses Are Being Investigated
The government is focusing on cases where it believes borrowers lied on applications, misrepresented payroll, used loan proceeds for unauthorized purposes, or sought multiple loans improperly. In some situations, discrepancies may be the result of mistakes or poor recordkeeping rather than intentional fraud. Unfortunately, federal investigators often treat these discrepancies as evidence of misconduct. Business owners who face an investigation must understand that the government has wide authority to pursue criminal charges if it believes fraud occurred.
How Serious Are PPP Fraud Charges?
PPP fraud is treated as a serious federal crime. Charges may include wire fraud, bank fraud, making false statements to a financial institution, or conspiracy. Each of these offenses carries significant penalties, including the possibility of large fines and lengthy prison sentences. Even when cases do not result in prison, the reputational and financial consequences can be devastating for small business owners. Because of the high-profile nature of PPP fraud, prosecutors often seek tough penalties to deter others.
Which Agencies Are Leading the Charge?
Several federal agencies are involved in investigating PPP loan fraud. The Department of Justice (DOJ) has taken the lead in prosecuting cases, while agencies such as the FBI, IRS, and Small Business Administration’s Office of Inspector General also play active roles. These agencies have been working together to review loan data, cross-check applications, and identify borrowers who may have misrepresented their eligibility. For business owners, this means investigations are thorough and well-resourced.
What Is the Investigation Process Like?
The investigation process can begin in different ways. Sometimes a bank flags suspicious activity. Other times, government auditors review loan documents and spot irregularities. Business owners may first learn they are under investigation when they receive a subpoena, a request for documents, or even a visit from federal agents. From there, investigators may review tax returns, payroll records, and business documents to determine whether misrepresentations were made. Interviews with employees and financial institutions are also common. What begins as a simple inquiry can escalate quickly into a full criminal investigation.
What to Do If You Are Under Investigation or Charged
For a business owner, being investigated for PPP fraud can feel overwhelming. It is important to remain calm, avoid speaking to investigators without counsel, and immediately consult an attorney experienced in federal criminal defense. A defense lawyer can evaluate the government’s evidence, explain the charges, and build a strategy to protect your rights. In some cases, an attorney can demonstrate that errors were unintentional, negotiate with prosecutors, or seek to resolve the matter before formal charges are filed.
Protecting Your Future With Experienced Counsel
PPP loan fraud investigations are part of a nationwide crackdown, and the federal government is pursuing these cases aggressively. The consequences of a conviction are severe, but business owners do have options for defending themselves. If you or your company is under investigation or has been charged with PPP fraud, it is essential to act quickly. The Federal Defense attorneys at Burnham & Gorokhov have extensive experience representing clients in federal criminal cases, including complex fraud matters. Contact our office today to discuss your situation and learn how we can help protect your rights in the face of a PPP loan fraud investigation.