As part of COVID-19 relief efforts, the federal government signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act — a crucial piece of legislation intended to provide businesses and individuals affected by the pandemic with various benefits. A central aspect of this act was the Paycheck Protection Program (PPP), which was created to provide loans to small and medium-sized businesses to support their workforce and cover utilities, rent, and other expenses. If specific qualifications are met, these loans are also designed to be forgiven, effectively providing grants to these eligible small and medium-sized businesses.
However, whenever there is a new program like this which offers risk-free and forgivable funding, there’s going to be cause for concern. Many individuals and companies alike have since been accused of attempting to fraudulently take advantage of the PPP loans. Federal fraud charges are incredibly serious, which is why if you or your company is under investigation for fraud related to a PPP loan, you’ll want to have a PPP loan fraud lawyer in Tampa with The Rickman Law Firm by your side.
While the CARES Act itself does not contain penal provisions for PPP loan fraud, there are a number of federal charges you may face if accused of PPP loan fraud, depending on the alleged circumstances. These potential charges may include but are not limited to:
Under 18 U.S.C. § 1028A, you can be charged with aggravated identity theft for knowingly transferring, possessing, or using the identification of another person without permission in connection with a particular felony offense. The offenses that typically apply to an individual involved in PPP loan fraud are bank fraud and wire fraud. For example, fraudulently obtaining a PPP loan on behalf of a company you don’t own can be classified as aggravated identity theft. For aggravated identity theft, you’ll serve a sentence for the felony you committed, in addition to a mandatory two years. If the offense is related to terrorism, you’ll also serve another mandatory 5 years.
Under 18 U.S.C. § 1344, you can be charged for bank fraud for using deception to obtain money, assets, or other property owned or held by a financial institution or knowingly executing or attempting a scheme to defraud a financial institution. In the case of PPP loan fraud, you may be charged with bank fraud for submitting fraudulent loan applications. Criminal penalties include up to a $1 million fine and 30 years of federal imprisonment.
Under 18 U.S.C. § 1343, wire fraud is defined as any scheme to commit fraudulent activity that involves the use of the Internet. As applications are largely submitted online, it’s incredibly easy for prosecutors to tag on wire fraud charges to other charges for PPP loan fraud. Wire fraud carries a sentence of up to 20 years federal imprisonment and fines ranging from $250,000 for individuals to $500,000 for organizations.
As the SBA is the agency responsible for administering the PPP loans, it is considered a federal criminal offense to knowingly make false statements to them under 18 U.S.C. § 1014. You can be charged with making false statements to the SBA for both making false statements on your certifications for loan forgiveness as well as making false statements on your PPP loan applications.
It’s not uncommon by any means for individuals accused of PPP loan fraud to also face allegations of tax evasion. Under 26 U.S.C. § 7201, any individual who willfully attempts to evade or defeat a tax imposed by the IRS can face prosecution. This includes failing to report income derived from activities funded by PPP loans and claiming deductions for payroll expenses covered by PPP loan funds. When charged with tax evasion, you’ll face fines ranging up to $100,000 for individuals and $500,000 for corporations and up to five years in federal prison.
If you or your company is being targeted by an investigation for PPP loan fraud, it’s absolutely critical that you have the assistance of PPP loan fraud lawyers in Tampa. We can help you create a strong defense by outlining a thorough trail of your application process and how your PPP loan funds were spent. This will serve as a demonstration that you were acting in good faith and attempting to follow the program requirements as best as possible.
For a free consultation with an experienced PPP loan fraud lawyer in Tampa, please contact The Rickman Law Firm at (813) 999-0502 or submit our contact request form.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.