Aggressive Investigations Require Proactive Defense
At the end of September 2022, the Department of Justice (DOJ) launched “Strike Force Teams” to investigate and prosecute Paycheck Protection Program (PPP) loan fraud. Of the $800 billion distributed through the PPP, some estimate that $100 billion could have been fraudulently spent or obtained. Nearly a quarter of loan recipients, according to these same estimates, may have committed fraud.
The Justice Department, since announcing the Strike Force Teams, has launched numerous investigations and already announced many convictions related to PPP loan fraud.
If you received a loan through the PPP and have since been informed that you are the target of a federal investigation, Burnham & Gorokhov is ready to be your partner in a proactive defense.
A Primer on the PPP
When COVID-19 shutdowns caused millions to lose their jobs and threatened the survival of millions of businesses, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Paycheck Protection Program was a major component of the bill, providing forgivable loans intended to keep employees on payrolls while businesses remained closed or restricted. However, relatively little oversight accompanied these loans, even as more than 10 million businesses received close to a trillion dollars through the program. It is because of that relatively sparse oversight that the government is now aggressively investigating alleged cases of fraud.
Illegal Actions Involving PPP Loans
The following are illegal actions which have commonly resulted in Federal charges
- Submitting false statements to a financial institution. This could happen during the loan application, certification, or forgiveness processes, resulting in charges of mail fraud, bank fraud, or wire fraud.
- Receiving loans from multiple lenders
- Using the loan funds for ineligible business expenses, which are expenses other than payroll, utility bills, and rent or mortgage payments.
- Using the loan funds for wholly fraudulent purposes, purposes which are not at all related to business.
- Money laundering, such as writing fraudulent paychecks to nonexistent employees or moving loan funds into personal accounts
- Providing false or misleading information to investigators during an audit or any other investigation
- Concealing information from investigators during an audit or any other investigation
Potential Sentences for PPP Loan Fraud
The potential sentences for fraudulent PPP activities vary based on the federal statutes under which a defendant is charged, but the fines and prison terms imposed can be substantial. The maximum sentence for money laundering is twenty years per violation; the corresponding maximum fine is the greater value of half a million dollars or twice the laundered value. Making false statements to a financial institution could incur a maximum of thirty years in prison or a million-dollar fine.
Contact Us As Soon As Possible
The best time to hire legal counsel when facing a federal investigation is as early as possible. At Burnham & Gorokhov, we work to prevent our clients from ever facing charges. Becoming involved in a client’s defense early in the investigation phase gives us the most flexibility to do this.
If you are under investigation for alleged PPP loan fraud, contact the federal criminal defense lawyers at Burnham & Gorokhov as soon as possible.