Congress passed the CARES Act on March 29, 2020 which created a $349 billion dollar program of forgivable loans called the Paycheck Protection Program (PPP). To apply for the forgivable loan, an applicant simply had to submit an application to their bank along with evidence of payroll for the last year which generally included tax returns, payroll returns, and corporate documents.
If you lied on the PPP loan application, submitted false or forged documents, or misrepresented your income, you could be investigated for PPP loan fraud. PPP loan fraud could result in numerous federal criminal charges including wire fraud, bank fraud, mail fraud, and identity theft depending on the circumstances of your case.
The federal government has already been aggressively prosecuting individuals who have engaged in illegal conduct on their PPP loan applications. In July, federal prosecutors in Miami, FL charged an individual who allegedly used PPP loan proceeds to purchase a 2020 Lamborghini. In August, the federal government charged two individuals who allegedly lied about owning a farm and employing individuals at the Miami home to obtain a PPP loan. In October, prosecutors charged numerous individuals with bank fraud and wire fraud after they allegedly recruited dozens of companies to submit fraudulent PPP loan applications in exchange for illegal kickbacks.
Federal law enforcement agencies have likely just scratched the surface of criminal conduct related to the filing of PPP loan applications and other criminal investigations are very possible in the near future.
Types of PPP Loan Fraud
PPP Loan Fraud can be charged in numerous different ways depending on the facts of each case. Here are some common federal charges:
- Bank Fraud – Bank Fraud involves attempting or engaging in a scheme to defraud a federally insured financial institution. Since all PPP loan applications were required to be processed through a quailed bank, Bank Fraud could be charged if the individual lied on the application or submitted false or forged supporting documentation to the bank.
- Wire Fraud – Wire Fraud involves attempting or engaging in a scheme to defraud an individual or entity of money using wire, radio, or television communication that affects interstate commerce. Since PPP loans are funded by wire transfers from the SBA to the individual’s bank account, wire fraud would likely be a result of any PPP loan fraud investigation.
- Mail Fraud – Mail Fraud involves attempting or engaging in a scheme to defraud an individual or entity of money using the United States Postal Service. If an individual used the mail to submit false documents in support of their PPP loan application to either their lender or to the SBA, then they could be charged with Mail Fraud.
- Identity Theft – Identity Theft involves unlawfully using another individual’s identity in furtherance of a crime. If an individual used another person’s identity in making the PPP loan application, they could be charged with Identity Theft.
Penalties for PPP Loan Fraud
Each of the criminal charges above carries serious potential consequences.
- Bank Fraud – Punishable by up to 30 years in a federal prison and a $1,000,000 fine.
- Wire Fraud –Punishable by up to 30 years in a federal prison and a $1,000,000 fine.
- Mail Fraud – Punishable by up to 30 years in a federal prison and a $1,000,000 fine.
- Identity Theft – Punishable by up to 30 years in a federal prison and a $1,000,000 fine. The crime can also be punishable by a minimum mandatory sentence of 2 years which will run consecutively to any other conviction.
In addition to the penalties above, convictions for any of these criminal charges could subject the individual to being placed in removal proceedings if they are not a United States citizen.
Defenses to PPP Loan Fraud
An arrest to a crime does not always result in a conviction. If you, or someone you know, is arrested for any of the crimes related to PPP loan fraud, they may have several defenses available to them.
- Lack of Intent – Most of the crimes related to PPP Loan Fraud involve the government being required to prove that you intentionally or knowingly misrepresented a fact on a PPP loan application in order to receive more money. Forms can be confusing and the average business owner has no experience as a lawyer, financial advisor, or accountant. If you unknowingly provided incorrect facts on the PPP loan application either through mistake or neglect, you may have a defense to criminal charges.
- PPP Loan Used for Legitimate Purposes – Every individual who signed a PPP loan application was required to certify that the funds would be used for “business-related” purposes under the PPP loan requirements. The federal government will be very interested to prosecute individuals who use PPP loan proceeds to buy expensive items such as cars, vacations, and jewelry. However, “business-related” expenses is a very vague term and there could be many examples of expensive purchases that a defendant could argue was being used for legitimate business purposes.
- Identity – In every criminal case, the federal government is required to prove that you are the person that committed the crime. In most PPP loan applications, the applicant files the application and supporting documentation online without ever walking into a bank or speaking to someone on the phone. Therefore, the government will generally rely on circumstantial evidence to prove that you were the one that both submitted the application and received funding. However, if they don’t submit that circumstantial evidence in court, you could have a potential defense.
Attorney for PPP Loan Fraud in Miami, FL
If you are being investigated for any crime related to PPP Loan Fraud in Miami, FL, you will need an experienced and aggressive criminal defense attorney for representation. The crimes associated with PPP loan fraud have serious consequences and your liberty could be at stake.
E.J. Hubbs has experience as both a criminal defense attorney and as a former prosecutor. With over 10,000 criminal cases in his career, he has the experience necessary to give you the best chance to get a favorable result. In addition, he is Board Certified in Criminal Trial Law by the Florida Bar; an honor held by less than 1% of attorneys in Florida.
Hubbs Law represents clients on all types of criminal cases, including crimes related to PPP Loan Fraud, in Miami, South Miami, Hialeah, Cutler Bay, Miami Gardens, Kendall, Palmetto Bay, Pinecrest, Homestead, and anywhere else in Miami-Dade County.
Hubbs Law offers free consultations for all criminal cases. Call anytime to discuss a case or legal issue at 305-570-4802.
Disclaimer: Please note that by reading this blog you are not entering into an attorney-client relationship with Hubbs Law, P.A. This blog only provides general legal information. Every case is unique and you should request a consultation to ensure that you are getting the correct legal advice for your specific case.