The COVID-19 pandemic brought a lot of uncertainty with it. Businesses shut down and employers sought relief. The federal government provided an avenue for relief with the Paycheck Protection Program. With $800 billion set aside, the PPP loans were intended to be low-interest, forgivable loans to help businesses keep employees paid through closures and to avoid layoffs.
In its first year, more than $2.2 billion in loans were approved in New Mexico, covering 270,000 jobs. The program ended in 2021, but the federal government is working to uncover fraudulent loans. Officials within the Small Business Administration, who oversaw the loans, suspect that at least 70,000 loans were fraudulent.
Anyone suspected of fraud faces federal charges which carry hefty penalties, including fines and federal prison sentences. Learn more about potential criminal charges and how to defend yourself if you’re accused.
What Kinds of Fraud are Associated with PPP Loans?
Fraud defines the act of misrepresenting facts to deceive someone else for personal gain. You could be accused of fraud for lying in a contract or giving statements with false information.
If you’ve been accused of fraud on your PPP loan, you might have been accused of one of the following:
- Application fraud: you’re accused of providing false information on your loan application. You might have lied about the number of employees, your company’s revenue, or salaries. Companies convicted of application fraud have been found to list some employees as independent contractors to meet the “fewer than 500” employee limit.
- Fraudulent use: you’re accused of misusing the funds provided with the loan. They were intended to pay your expenses — rent, payroll, insurance, or utilities. People convicted of misusing frauds used them for personal expenses or buying luxury items. Basically, using funds for anything that wasn’t a legitimate business expense could qualify as fraudulent use.
- Fraudulent loan forgiveness certification: you’re accused of presenting false information during the loan certification process. When you’re seeking loan forgiveness, you have to prove you needed the loan because of the pandemic. You also have to show you used the funds as intended. You have to show you were only given one loan.
- Fraudulent loan stacking: you’re accused of going to more than one lender, which is prohibited by the PPP program. Some applicants for the loans falsely applied using stolen identifications.
Criminal Charges Associated with PPP Fraud
PPP fraud is a serious allegation, one that carries severe consequences. If you’re accused of committing PPP fraud, you could be charged with federal felonies. If convicted, you’ll face fines, time in federal prison, or be forced to pay back the funds you received in your loan.
Federal charges for PPP fraud include:
- Making a false statement (18 U.S. Code § 1001): This charge happens if you omit, misrepresent, or use a fraudulent document while applying for or certifying your loan. It means you made your statement knowingly and willfully intended to deceive a government agent. If convicted, you could be sentenced to five years of prison.
- Conspiracy to Commit (18 U.S. Code § 371): You can be charged for conspiracy if you and at least one other person or company work together to defraud the US government when applying or certifying your PPP loan. If convicted, you face a maximum of 30 years and up to $1 million in fines. This charge can be added to others.
- Bank fraud (18 U.S. Code § 1344): These types of charges happen if you seek to obtain funds through false information or deception. If you apply for a loan with false information or forged documents, you might be accused of bank fraud. If convicted, you could go to prison for a maximum of 30 years and face fines of up to $1 million.
- Wire fraud (18 U.S. Code § 1343): If you used electronic communication means to commit PPP fraud, you could be charged with wire fraud. You could have sent e-mails for your application, lied during phone calls, or used other methods to discuss or commit fraud. If you’re convicted of wire fraud, you could face up to 20 years in a federal prison and fines up to $250,000.
- Aggravated Identity Theft (18 U.S. Code § 1028A): When someone knowingly uses another person’s identity to commit PPP fraud, they could be accused of felony identity theft. If convicted, they could be sentenced to two years in prison on top of any other felony sentences.
Besides criminal convictions, you could be forced to pay back your loan in full. Hiring a lawyer to help establish a defense is your best bet to avoid significant penalties.
Defenses Against PPP Fraud Accusations
Just because you’ve been accused of committing PPP fraud, you are considered innocent until proven guilty. There are arguments you can make against the allegations against you, including:
- Lack of intent: PPP loans are complicated. There are several regulations for you to follow. If you can prove that you did not intend to break the law or defraud the government, you could see your charges dropped or reduced.
- Insufficient evidence: Like other criminal investigations, the federal government will need to build a case against you. They must prove to a judge or jury that you committed fraud beyond a reasonable doubt. If the prosecution does not find enough evidence to show you committed fraud or if you can introduce doubt to their arguments, you could get your charges dismissed or dropped.
When you’re facing federal felony charges, a conviction could do more than inconvenience you. It could totally disrupt your life. You’re facing fines on top of paying back your loan, and possible decades of prison time. It’s critical that you find an attorney who is ready to help you defend yourself.
Why Should I Hire a Lawyer?
PPP fraud charges can seriously affect your life. A criminal defense lawyer with experience fighting federal cases could make all the difference in your case. You should find an Albuquerque defense lawyer ready to fight for you.
Your attorney can guide you through the legal nuances to dispute your PPP fraud charges. They’ll be able to investigate the charges, find the evidence you need to get your charges reduced or dropped.
Start Your Fraud Charges Defense Today
PPP fraud charges are serious allegations of wrongdoing, and you could be facing an upheaval of significant proportions. If you’ve been accused of trying to defraud the government, turn to a reliable New Mexico criminal defense attorney. The team at Harrison & Hart, LLC, are prepared to hear your story and get started on your defense.