The centerpiece of the Coronavirus Aid, Relief, and Economic Security (CARES) Act Paycheck Protection Program was the Paycheck Protection Program (PPP), which provided a total of $934 billion in financial assistance to businesses affected by the COVID-19 pandemic. Additionally, the U.S. government created the Economic Injury Disaster Loan (EIDL) through the Small Business Administration (SBA) for further funding to companies in need.
However, because billions of dollars have been distributed with little oversight, such loans have been the target of bank fraud. The U.S. Department of Justice (DOJ) continues to investigate PPP and EIDL loan recipients throughout the nation. Whether such recipients accidentally or deliberately make mistakes or omissions on their applications, such actions may lead to federal charges.
Common types of PPP & SBA loan fraud include:
Material misrepresentations – PPP and SBA EIDL program applicants are required to certify if certain facts about their business are true. Therefore, if a person or company provides materially false on the initial loan application, then federal authorities may investigate the matter.
Multiple loans – Commonly known as “loan stacking” or “clone loans” by federal law enforcement agencies, this occurs when one applicant applies for multiple loans from multiple lenders.
Improper use of funds – Funds disbursed under the PPP and EIDL program are required to be used to reimburse payroll costs and benefits, mortgages and leases, and utilities. Although applicants may certify the funds are being used for those purposes, they could also be used for other purposes, such as personal expenses.
Obstructing a federal audit or investigation – If a PPP or EIDL loan recipient is being investigated by federal authorities (e.g., FBI, IRS, OIG, etc.), such agencies may issue warrants, subpoenas, as well as to conduct searches/seizures and interview persons of interest. If a recipient intentionally or knowingly makes false statements, withholds certain information, or otherwise obstructs a lawful investigation, such conduct can result in criminal charges.
Federal loan disbursement rules, regulations, and requirements are quite complex. If you and your company are being investigated for federal loan fraud or bank fraud in Massachusetts, New York, or New Hampshire, look no further than Brad Bailey Law. Our legal team has more than 37 years of experience handling serious criminal cases in federal court and understands what it takes to get the best possible outcomes on behalf of our clients.
If you are being accused of PPP or SBA EIDL loan fraud, contact Brad Bailey Law today at (617) 500-0252 for a free initial consultation. Get a former federal and state prosecutor on your side!