The federal government allocates significant resources to identifying the scope and scale of Payment Protection Program fraud. Business owners face fines and jail terms from the resulting federal investigations. The SBA audits companies that received $2 million or more in PPP loans. Several federal agencies, including the FBI, the DOJ, and IRS, conduct criminal fraud investigations based on the SBA audits. If you’re facing a PPP loan fraud audit, this latest post can help answer your questions. Our PPP loan fraud defense attorneys can help clarify the next steps in your loan fraud defense.
Paycheck Protection Program PPP Loan Fraud Cases Rising
To address economic hardship during the COVID-19 pandemic, the United States government authorized $5 trillion in relief programs, including the PPP loan program and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Government investigators now suspect $64 billion in fraud losses for the U.S. federal government tied to PPP loans. Investigators are now working tirelessly to recoup these losses and business owners from dentists to manufacturing plant operators, are facing federal charges.
The Benefits of Hiring Skilled PPP Loan Fraud Defense Lawyers
PPP loan fraud defense lawyers are your best first call when under investigation. Whether you receive a subpoena, a target letter, or a criminal complaint relating to a PPP loan, your loan fraud defense attorney can analyze the weight of evidence against you and build a powerful defense. PPP loan fraud lawyers will also help you collect documentation before federal investigator-imposed deadlines, allowing for careful cooperation with the investigation and ensuring a timely and compliant response.
Proactive Investigation to Stay Ahead of the Federal Authorities
Your loan fraud defense lawyer will actively investigate your case. They will find possible flaws in your compliance structures before investigators do.
For example, your loan fraud defense lawyers can find misleading details on PPP loan fraud applications. They can also spot unauthorized use of PPP loan funds. They will help you explain these issues before the investigator makes a decision.
Preparing Your PPP Loan Fraud Case for Trial
Fraud defense lawyers will help you and your team prepare for the case. They will create a strong plan to present your defense in court. Your loan fraud defense lawyers will work hard to resolve the case during the investigation. If needed, they can also represent you strongly in court against federal prosecutors.
PPP Loan Fraud Defense: FAQ
How Would I Know If My Company is Under Investigation for PPP Loan Fraud?
The federal agencies will inform you of a criminal complaint against you. As a precursor to criminal charges, the SBA, FBI, or DOJ will send officers to your home, business, or financial institution and present you with a subpoena or a search warrant. In this scenario, you have limited time to speak with a PPP loan fraud defense lawyer to explore your options and protect your documentation.
Do I Need a PPP Fraud Lawyer During an SBA Audit?
An SBA audit can trigger an investigation, so you should speak with a loan fraud lawyer to determine the next best steps if you have an upcoming audit. The SBA-OIG has an auditing division that often refers cases to its investigations division for further review. You should also know that investigators can then use all information obtained during your SBA audit, so preparing for the audit alongside your PPP loan fraud defense lawyer is the best way to ensure compliance.
What Are the Red Flags Investigators Look For in PPP Loan Fraud Cases?
In determining whether to refer your case to the investigations division, the SBA-OIG will generally look for specific indicators of a potential fraud case. The red flags that may catch the attention of auditors include:
Use of PPP Loans for Personal Expenses
The terms of the PPP prohibit the use of PPP loan money for personal expenses. Business owners may fall under suspicion when they pay for business travel expenses, home office expenses, and other items that auditors can prove are not solely business expenses.
No Documentation Substantiating PPP Loan Application Representations
To qualify for a PPP loan, business owners must show how they meet the criteria. For example, successful PPP loan applicants must:
- Qualify as a small business under the Small Business Act and have fewer than 500 employees.
- They applied for the loan because of the uncertain conditions during the pandemic. They needed the loan to support their ongoing business operations, such as covering payroll costs.
- To qualify for SBA programs, you must prove that no owner with a 20% share or more has a federal felony conviction. Also, confirm that no owner has faced a federal felony conviction in the past five years.
Business owners who cannot prove their claims from the loan application may face charges in a PPP loan fraud investigation. They can also be charged with making false statements
Cannot Produce PPP Compliance Documents
If companies cannot provide documents that show they followed the PPP rules, this is a big warning sign for auditors. Auditors may also question staff. A staff member’s evasive actions during PPP loan audits could lead to the recommendation of an investigation.
No Separate PPP Loan Account
Under the terms of the PPP, companies are only allowed to use loan funds for specific purposes. For compliance with the terms of the PPP, companies must have separate accounts for their PPP loan spending.
Company owners must show the disbursements and how they spent the funds. Mixing PPP loan funds with other company money can cause problems. Using these funds for things other than payroll and insurance may lead to an investigation.
Protect Your Future with PPP Loan Fraud Defense Lawyers Lowther | Walker
Lowther | Walker is a powerful partner to business owners facing PPP loan fraud investigations. We can respond to PPP loan fraud cases nationwide, including Arizona, Alaska, Florida, Georgia, Alabama, Kansas, and Oklahoma.
As the country’s foremost PPP loan fraud defense lawyers, we’ve successfully defended business owners in jurisdictions across the U.S. who are facing fines and prison sentences during PPP loan fraud investigations. Don’t delay. Book your free, no-obligation consultation with Lowther | Walker to begin your PPP fraud defense.