Now that the May 14th “get out of jail free card” has expired for undeserving PPP loan recipients to return the funds “no questions asked” the Internal Revenue Service (IRS) and the Small Business Administration (SBA) will be auditing all loans above 2 million dollars and will be investigating and prosecuting alleged fraud. When the Government increases investigations and prosecutions a lot of innocent people will be caught up in the Government’s net.
As of August, there have already been over 12 people charged with Stimulus Fraud. The more difficult cases that will be coming up will be investigations against borrowers that the Government has disagreed with their economic need for the loan.
Some of the requirements for a PPP loan the borrower must have no more than 500 employees and must certify in good faith that the loans will be used for payroll and other permissible business purposes. Borrowers must also certify, “the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient.” Based on this certification, the IRS and SBA will be pursuing criminal charges.
Possible Fraud Allegations:
- Loan Stacking – receiving multiple loans from multiple lenders
- PPP and SBA Loan Application Fraud
- Frauds and Swindles – 18 USC § 1341
- Fraudulent Loan Certification
- Using PPP Loan Proceeds for unauthorized business purposes
- Using PPP Funds for fraudulent purposes
- Fraudulent Loan Forgiveness
- Impeding or Obstructing a PPP and SBA Loan Investigation
- Bank Fraud – 18 USC § 1344
- Wire Fraud – 18 USC § 1343
- Conspiracy – 18 USC § 371 “Klein Conspiracy”
- Making False Statements – 18 USC § 1001
Some of these statutes require a certain mindset. The defendant must have known what they were doing was wrong. You often hear ignorance of the law is no defense, but in these cases, it will be. If you received more than 2 million in stimulus funds and did not return the funds, you will be audited. If you are a target of PPP loan fraud investigation or have any concerns about your application, you need to consult with attorneys experienced in federal white-collar defense work. Minns & Arnett are experienced in handling federal criminal cases that require knowingly, and willfulness. The possible charges have either a knowingly or willfulness requirement.