Federal law enforcement agencies like the FBI and DOJ are aggressively arresting and pursuing criminal charges against those suspected of defrauding the Paycheck Protection Program (PPP). Allegations of fraud in connection with the Paycheck Protection Program are a serious matter requiring expert legal guidance. If you have been arrested by federal agents in connection with alleged PPP loan fraud, you probably have questions about your rights and the strongest possible defense against fraud charges. The best way to protect yourself following a PPP loan fraud arrest is to enlist the help of a qualified criminal defense attorney who specializes in federal fraud charges. Our legal team is committed to protecting the rights of those suspected of committing PPP fraud and we can help you fight the charges and clear your name.
The Paycheck Protection Program
The U.S. Small Business Administration (SBA) introduced the Paycheck Protection Program following the adoption of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The loan program was established as part of an effort to keep American workers employed and help business owners keep their operations running during the COVID-19 pandemic, and the loan program has succeeded in providing business owners and self-employed individuals across the country with access to funds at a time when they are needed the most. The Paycheck Protection Program also gives loan recipients the opportunity to have their repayment obligations forgiven, so long as they meet the required employee retention criteria and use the funds for payroll costs and eligible expenses.
PPP Loan Fraud
Due to the sheer volume of loan applications seeking funds through the Paycheck Protection Program and the speed at which the loans were processed, combined with a lack of sufficient safeguards to prevent fraud, many ineligible companies received loans, some worth millions of dollars. The SBA previously stated in a 2019 report that “disaster loans are vulnerable to improper payments, fraud, and default because loan transactions are often expedited to provide quick relief to disaster survivors.” Within weeks of the Paycheck Protection Program being introduced by the SBA, the loan program encountered widespread scrutiny and the Department of Justice launched a wave of criminal investigations aimed at rooting out PPP loan fraud. At the same time, it was announced that the SBA would be auditing recipients of loans amounting to $2 million or higher and some recipients of smaller loans as well. Together, these efforts have resulted in a number of businesses and individuals being criminally charged with defrauding the Paycheck Protection Program.
Federal Criminal Charges for PPP Fraud
The DOJ has been aggressive in its pursuit of justice in connection with PPP loan fraud. Within just a few short weeks after the CARES Act was passed in March, the agency had already filed federal charges against at least 15 individuals alleged to have defrauded the PPP loan program, including defendants in Texas, New York, Virginia and Ohio. Special Agent in Charge Joseph R. Bonavolonta of the FBI’s Boston Field Office said in a May 5 press release announcing the first PPP loan fraud arrests, that the arrests “should serve as a warning to others that the FBI and our law enforcement partners will aggressively go after bad actors like them who are utilizing the COVID-19 pandemic as an opportunity to commit fraud.” In an effort to deter future fraudulent activity involving the Paycheck Protection Program, the DOJ is pursuing a wide range of criminal charges in current PPP loan fraud cases, including the following:
- Bank Fraud (18 U.S.C. § 1344)
- Tax Evasion (26 U.S.C. § 7201)
- Wire Fraud (18 U.S.C. § 1343)
- Making False Statements to the SBA (15 U.S.C. § 645)
- Making False Statements to a Financial Institution (18 U.S.C. § 1014)
- Making False Statements to Federal Agents (18 U.S.C. § 1001)
- Aggravated Identity Theft (18 U.S.C. § 1028A)
- Conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349)
These are serious federal crimes carrying substantial fines and lengthy prison sentences and there will likely be additional fraud charges added to this list as the federal government continues to carry out PPP loan fraud investigations and arrests.
What to Do if You Have Been Arrested by Federal Agents
Exercise Your Right to Remain Silent
The most important thing to remember after being arrested by federal agents for PPP loan fraud is that you have several important rights afforded to you under the U.S. Constitution, which provides certain protections for those accused of violating federal law. This includes the right to remain silent and the right to be represented by an attorney. We know that being arrested by federal agents can be scary and stressful, and you may feel compelled to argue your innocence to the arresting officers, but we can’t stress enough how important it is to exercise your right to remain silent until you speak to an attorney, no matter what crime you have been accused of committing and no matter how innocent you may be.
Consult an Experienced Federal Criminal Defense Attorney
Federal criminal cases are brought by federal prosecutors, also known as U.S. Attorneys, who represent the United States federal government. U.S. Attorneys tend to be more aggressive in their handling of criminal cases than state prosecutors, and federal penalties are generally more severe than state penalties, even for comparable offenses, which is why you need an experienced federal criminal defense attorney on your side. Defendants in federal criminal cases have the same rights as those in state criminal cases, including the fundamental right to be presumed innocent until proven guilty in criminal court. Just like state prosecutors, U.S. Attorneys are required to prove guilt beyond a reasonable doubt, which is where a good defense attorney comes in.
PPP Fraud Investigation
With the DOJ’s continued efforts to swiftly investigate allegations of PPP fraud and file criminal charges and with the SBA auditing recipients of PPP loans, the risk of facing prosecution for fraud in connection with the Paycheck Protection Program remains high. And while businesses and individuals that both obtained PPP loans because of a legitimate financial need and used the funds for authorized purposes (i.e. to retain their workforce and cover payroll costs and eligible expenses) may not have any reason for concern, all PPP loan recipients should be aware of the potential for PPP fraud allegations to be levied against them.
Many federal fraud cases begin with an investigation and depending on the case, you may or may not know the investigation is going on. Investigations for alleged financial crimes like fraud can be complex and may involve several federal agencies, such as the FBI, IRS and DOJ. If federal agents ask to speak with you or request information from you, you should contact a federal criminal defense attorney right away to discuss your rights and options. Even if the agents claim that someone else is the target of their investigation, you will want to avoid talking to investigators without an attorney present.
PPP Fraud Federal Indictment
For potential felony charges, the U.S. Attorney will present the evidence gathered during a fraud investigation to a grand jury, which is a group of citizens tasked with determining whether there is sufficient evidence to pursue federal charges against the criminal suspect. When a criminal suspect is indicted, he or she is given formal notice that he or she is believed to have committed a federal crime, such as PPP loan fraud. The federal indictment contains the basic information about the nature and basis of the criminal charges.
How an Experienced PPP Attorney Can Help
When the Paycheck Protection Program was first introduced, some people saw the forgivable funds as “free money.” However, there are significant restrictions on who can legally obtain PPP funds and how the funds can be used, and these guidelines can be confusing, which increases the risk of PPP loan recipients facing potential allegations of fraud. If you fraudulently obtained PPP funds or falsely certified that the loan was necessary to keep your business operations running during the coronavirus pandemic, you could end up being arrested by federal agents on suspicion of fraud. Criminal investigations involving PPP loan fraud are underway and more than a dozen loan recipients have already been charged with bank fraud, wire fraud and related federal offenses. Your best chance at beating these charges is to hire a knowledgeable PPP attorney immediately after your arrest. Our PPP attorneys have extensive experience defending clients against federal white-collar crimes like fraud and we are prepared to represent individuals and businesses in SBA audits and DOJ investigations related to alleged PPP loan fraud.
Schedule a Consultation with Our Skilled PPP Attorneys
The federal government is exercising its considerable power in bringing individuals accused of committing PPP loan fraud to justice and if you have been targeted by a PPP fraud federal investigation, you could be arrested by federal agents. Being arrested for a federal crime like PPP fraud is a frightening experience. It is also an extremely serious matter and it can be difficult to know where to turn for help following an arrest on suspicion of PPP loan fraud. Our reputable criminal defense attorneys know what it takes to beat federal fraud charges and we can help you protect your rights and best interests. Contact our firm today to schedule a free PPP fraud consultation.