Payroll Protection Program (PPP) Fraud

At the height of the COVID-19 pandemic, Congress passed several measures providing financial assistance to struggling people and businesses. Under the CARES Act's Payroll Protection Program (PPP) and Economic Injury Disaster Loan (EIDL), Congress set aside $350 billion for small businesses in need of loans to cover payroll, mortgage, rent, and utility payments. Additional federal COVID relief programs include monies for unemployment benefits, homeowner assistance, and economic relief payments.

Since implementing these programs, the Department of Justice has made a concerted effort to ensure the proper disbursement of pandemic relief funds. In doing so, the Department's Criminal Division Fraud Section and U.S. Attorneys’ Offices around the country have played an active role in partnering with local law enforcement agencies in combatting fraud and abuse. As a result, federal prosecutors have brought––and continue to bring––countless charges against individuals seeking federal funds fraudulently.

Once can face federal charges for several reasons, but here are a few examples:

  • Knowingly making false or inaccurate statements on COVID benefit applications, like overstating revenues and disbursements, or under/overrepresenting the number of employees
  • Seeking PPP or EIDL loans from multiple lenders
  • Pursuing PPP or EIDL monies for a fictitious business
  • Misusing funds for personal or unlawful purposes
  • Identity theft

Committing any of the offenses below can lead to severe civil and criminal penalties. Here are some charges federal prosecutors bring against those alleged to have committed PPP or EIDL fraud:

  • Wire Fraud (18 U.S.C. 1343): Wire fraud occurs when someone uses a form of telecommunications––like a cellphone or computer––to commit fraud. Prosecutors must prove: (1) a scheme to defraud and (2) the use of an interstate wire communication to further the scheme. A conviction of wire fraud comes with a sentence of up to 20 years in prison, along with hefty fines.
  • Conspiracy to Commit Wire Fraud (18 U.S.C. 1349): A conspiracy charge is unique because one doesn't have to commit the crime to face charges. Here, one only needs to "conspire" to violate federal law. One faces the same penalties as if they were to have committed the offense, so here, the same sentence and fines for wire fraud.
  • Aggravated Identity Theft (18 U.S.C. 1028A): One faces this charge if they knowingly transfer, possess, or use, without lawful authority, a means of identification of another person. A conviction of aggravated identity theft comes with a mandatory minimum sentence of two years which must run consecutive to any other term of imprisonment.
  • Bank Fraud (18 U.S.C. 1344): A bank fraud charge requires one to knowingly or attempt to execute a scheme or artifice to defraud a financial institution or obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises. One can face up to 30 years in prison and hundreds of thousands of dollars in fines.
  • False Statements to a Financial Institution (18 U.S.C. 1014): This crime occurs when one knowingly makes false statements or willfully overvalues any property or securities to influence a bank or government agency. Upon conviction, one can face nearly 30 years in prison and extensive fines.
  • Fraud in Connection with Major Disaster or Emergency Benefits (18 U.S.C 1040): After Hurricane Katrina in 2007, Congress sought to curb fraud and abuse when people were wrongly applying for disaster aid. They did this by passing the Emergency and Disaster Assistance Fraud Penalty Enhancement Act, which created a new criminal offense for those who knowingly engage in fraud or make a false statement involving a benefit paid out for disaster relief. Upon conviction, one can face upwards of 30 years in prison.

Given the vigor in which federal law enforcement and prosecutors seek to punish those alleged to have fraudulently applied or obtained PPP funds, the need for defense counsel is clear. Not only can an attorney help work with you to address any questions and concerns you have, but they can also, if arrested, begin preparing a bail package and your defense. As a former federal prosecutor, Peter Katz is well aware of how federal law enforcement agencies operate, and he can use that experience to advocate on your behalf effectively.