Paycheck Protection Program Fraud Prosecutions

The Federal Paycheck Protection Program, PPP, part of the CARES Act, provided funding to companies and businesses hit hard economically by the COVID-19 pandemic in 2020.  The program provided the economic relief to many companies who used the money to retain their employees and pay rent.  However, there were a significant number of individuals who filed false applications with various banks to receive funds which were not used for its intended purposes.

The Department of Justice, DOJ, has committed itself to prosecuting those individuals who filed false applications for such funds with banks and/or who subsequently misused said funds for their own respective self-serving reasons.  Many of the fraudulently obtained funds were SBA backed loans.  Many of the indictments issued by grand juries are for Bank Fraud, 18USC, 1344 and Section 2 or Money Laundering in violation of Title 18 USC, Section 1957.  These are felonies that exposes the individual to several years of incarceration.

If you find yourself exposed to an investigation by the U.S. Attorney’s Office, it is extremely important that you immediately secure the services of an attorney who has extensive experience in dealing with federal criminal courts and federal agents and prosecutors.  For the most part, these are cases with a “significant paper trail.” This means that documents such as the original PPP bank application, emails, texts, tax returns and the like, will be used to prove the government’s case. Talking to law enforcement, including agents from the FBI or IRS, is usually counterproductive; as a former prosecutor I convicted more defendants on their own words than all the police investigations combined.

Finally, it should be noted in addition to exposure to severe criminal penalties, individuals are also exposed to restitution orders and interest charges and penalties under the False Claims Act and the Financial Institution Reform, Receiving and Enforcement Act. CEO’s, presidents and owners of businesses under investigation need to understand that their respective businesses can be exposed to significant financial exposure and need to understand what needs to be done to limit losses.  Best advise is to get an experienced criminal defense lawyer on your side immediately.