Ongoing Issues with PPP Loan Fraud

The recent case of Florida basketball coach, Terrence Deshun Williams, shows the ongoing issues resulting from fraudulent claims for Paycheck Protection Program (PPP) loans. PPP loans are given out as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and were established in response to the COVID-19 crisis. Reporting has shown that by October, nearly $4 billion in loans had already been “red-flagged” by the US Department of Justice for investigation.

PPP loans have been rightfully established as a way for struggling businesses to make it through the COVID-19 pandemic, and many businesses are using these to survive. However, the provision of these loans has also opened the door for fraudulent applications. If you make a false claim for a PPP loan, you can be charged with a number of different offenses, including: 

If you have worked with other people to commit fraud, you can also be charged with conspiracy. These are all serious Federal crimes, and the US Department of Justice has noted that they will aggressively pursue “those who endeavor to defraud programs afforded to the American people.”

What are PPP Loans For?

PPP Loans were established under the CARES Act, as a way for small businesses to survive amongst the ongoing economic uncertainty. The program was specifically designed to allow money to get to these small businesses fast, in particular for preserving payroll employees, business rent or mortgages, or the payment of utilities. 

The problem with the program is that due to the rapid granting of many loan applications, potential fraudulent issues were not spotted immediately. Many loan applications are now under investigation, with law enforcement discovering that many loans were not spent on what they were supposed to be for, and that many more loan applications are missing information or contained false information.

False loan applications, or using PPP loan money for fraudulent purposes, is a serious crime, and can result in long imprisonment sentences. If you have claimed money fraudulently as part of a PPP loan, speak to a lawyer immediately. 

What Makes a Claim Fraudulent?

A fraudulent claim is one that uses false pretenses, such as lying about what you will use the loan for, or leaving out information so that the application becomes false by omission. Several sections of the US criminal code apply to these kinds of actions, and you can be charged with several different Federal crimes.

Mail or Wire Fraud

First, if you have transferred money into your bank account, or have used the post in any way to handle your application or the receipt or sending of money, you can be charged with mail fraud or wire fraud. These are both very broad crimes that have high penalties, and can easily be “tacked on” to other offenses.

Under 18 U.S. Code § 1341, if you devise or intend to devise a “scheme or artifice to defraud” with the goal of obtaining money or property, and you use the mails to do so, you can receive a fine or a sentence of imprisonment for up to 20 years. The same applies under 18 U.S. Code § 1343 for the use of the wires to do so. 

Bank Fraud

Another offense that is commonly charged in these kinds of cases is bank fraud. This is defined under 18 U.S. Code § 1344. If you are a person who “knowingly executes, or attempts to execute, a scheme or artifice” to defraud a financial institution, or to obtain money or property of some kind from a financial institution, you can receive a penalty of $1,000,000 or a sentence of imprisonment up to 30 years.

The False Claims Act

In addition, another important law to consider is the False Claims Act. This sets out under 31 U.S. Code § 3729 that if you knowingly present a false or fraudulent statement or a claim for payment or approval from the Federal government, that you can be subject to civil penalties from a minimum of $5000. 

The government can also claim back up to 3 times the amount paid out to you fraudulently, as well as any legal costs they suffer in pursuing the claim. This can add up to a huge amount of money. The difficult part about the False Claims Act is that “knowingly” is defined very broadly. 

It includes:

  • If you have acted in deliberate ignorance of the truth; or
  • Have acted in reckless disregard of the truth.

In addition, the False Claims Act requires no proof of specific intent to defraud. This can make it harder to argue that you did not intend to defraud the US government. You can be charged with these kinds of Federal crimes simultaneously, and the consequences and penalties can be cumulative and severe. It is crucial that you have legal representation to help you deal with the process. 

What Can You Do if Accused of PPP Loan Fraud?

You can defend against accusations or charges against you if you have been accused of PPP loan fraud. For example, you can argue that you:

  • Did not intend to defraud, or know that you were defrauding anyone. This would apply in a situation where you made a genuine mistake on your application. 
  • Had a genuine belief that the money you were spending was within the reasonable expectations of what you had received the loan for.
  • Spent money in line with what you applied for the loan for, and that the loan’s request was honest and accurate.

A criminal defense lawyer will be able to help you make your case so that you can find and put forward any evidence that helps you.

If you are about to apply for a PPP loan and you are concerned about making a mistake on your application, ask for help from a business or financial planning advisor to ensure that your application is correct. 

Call Stechschulte Nell For Help 

If you have been charged with fraud relating to PPP loans, the law office of Stechschulte Nell can advise you. Don’t wait. Call our top-rated Tampa, FL law firm at (813) 280-1244 to speak to an experienced federal defense attorney. We’re available 24/7 to take your call.

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