PPP Fraud Defense Attorneys in Washington, DC
The Paycheck Protection Program (PPP) was created to help businesses survive the economic disruptions caused by COVID-19. Trillions of dollars in loans were distributed quickly—often with minimal oversight. In the years that followed, federal agencies launched widespread investigations into PPP fraud. Today, PPP fraud remains one of the most aggressively prosecuted areas of federal law, targeting not only large companies but also small businesses and individuals.
PPP cases can involve complicated financial records, rapidly changing regulations, and government assumptions that are not always accurate.
What is PPP Fraud?
PPP fraud refers to any activity that the government alleges involved misuse of PPP funds or false statements made to obtain them. These cases vary widely in complexity and scope. Common accusations include:
- Submitting false information on PPP loan applications
- Misrepresenting payroll levels or number of employees
- Using PPP funds for unauthorized personal or business expenses
- Creating fictitious businesses or shell companies
- Applying for multiple PPP loans in violation of program limits
- Inflating revenue, expenses, or tax documentation
- Misrepresenting owner identity or criminal history
PPP fraud may be investigated as loan fraud, wire fraud, bank fraud, money laundering, identity theft, or false statements. These charges often carry serious penalties. Because the PPP program changed rapidly and official guidance was sometimes unclear, many people now under scrutiny acted in good faith under confusing rules. This is an important defense consideration.
How Are PPP Fraud Cases Investigated?
PPP fraud investigations originate from several sources:
- Data Analytics and Government Databases. The Department of Justice (DOJ) uses advanced algorithms to flag loan applications with inconsistencies in payroll, tax filings, employee counts, or business history. Many people learn they are under investigation only after federal agents make contact.
- Bank-Filed Suspicious Activity Reports (SARs). Financial institutions are required to report unusual or suspicious loan activity. If a bank believes loan proceeds were misused or documentation is inconsistent, it may file a SAR that triggers an investigation.
- Whistleblowers and Former Employees. The False Claims Act allows private individuals—including disgruntled employees or business competitors—to file whistleblower complaints alleging PPP fraud. These cases often involve disputes about payroll, business eligibility, or tax records.
- IRS, SBA, and OIG Audits. The Small Business Administration (SBA), Internal Revenue Service (IRS), and Offices of Inspector General (OIG) conduct retroactive audits of PPP loans. Even businesses that acted in good faith may receive audit notices years later.
What Conduct Is Considered PPP Fraud?
Federal prosecutors often pursue cases involving:
False Payroll Documentation. Allegations that businesses:
- Overstated payroll amounts
- Used incorrect IRS forms
- Claimed employees who did not exist
- Misrepresented business operations
Improper Use of Loan Funds. PPP funds were required to be used for payroll, rent, utilities, or mortgage interest. The government may bring charges if funds were used for:
- Personal purchases
- Home improvements
- Vehicles or luxury goods
- Nonqualified business expenses
Multiple Loan Applications. Submitting multiple applications for the same business—especially to different lenders—may trigger criminal charges.
Business Ineligibility. Many eligibility issues stem from unclear or evolving PPP rules, not criminal intent. Prosecutors may claim a business did not qualify due to:
- Size restrictions
- Revenue requirements
- Lack of legitimate operations
- False certifications
What Are Common Defenses to PPP Fraud?
PPP fraud cases frequently turn on intent, the accuracy of financial records, and the government’s interpretation of rapidly changing rules. Common defenses include:
Good Faith / Lack of Intent. Many businesses relied on accountants, evolving SBA guidance, or their best understanding of confusing program rules.
Ambiguous or Changing Regulations. PPP rules changed frequently during 2020–2021. Misinterpretation does not equal fraud.
Legitimate Business Expenses. What the government considers “fraudulent spending” may be consistent with PPP rules at the time of use.
Incorrect or Incomplete Government Data. Government databases frequently contain outdated or mismatched IRS and payroll information.
Clerical or Accounting Errors. Mistakes in tax forms, payroll processing, or application submissions occur in good faith.
Insufficient Evidence. Prosecutors must prove knowing and intentional misrepresentation, not just discrepancies.
Every case requires a detailed review of financial documents, communications, and SBA guidance.
Pre-Indictment Representation
Early intervention is especially critical in PPP cases. Before charges are filed, experienced counsel may:
- Communicate with DOJ prosecutors
- Clarify misunderstandings regarding tax forms or payroll
- Prevent charges where possible
- Limit the scope of subpoenas
- Protect clients during agent interviews
If you receive a target letter, subpoena, or visit from federal agents, consult counsel immediately. See Should I Speak to Law Enforcement?
Experienced PPP Fraud Defense Attorneys
PPP fraud allegations can be overwhelming—but many cases arise from misunderstandings, unclear guidance, and rapidly changing rules. An aggressive and knowledgeable defense can make a significant difference.
At Burnham & Gorokhov, PLLC, we represent businesses and individuals facing PPP fraud investigations and charges. In numerous cases, we have resolved federal fraud matters without criminal charges ever being filed.