Types of PPP Loan Fraud a PPP Loan Fraud Defense Law Firm in Tampa Sees

As of the time of this writing, a defense contractor in Hawaii has been charged with bank fraud and money laundering for stealing more than $12.8 million in Paycheck Protection Program (PPP) funds meant to assist small businesses affected by the COVID-19 pandemic. According to the report, the contractor submitted at least two fraudulent loan applications, falsely inflated the number of employees, and transferred more than $2 million into his own personal accounts. This is coming not even a few days after two government watchdogs who testified at a House hearing Thursday reported that the SBA Inspector General’s office had received tens of thousands of fraud tips.

Now, more than ever, the pressure is on to launch investigations into the hundreds of allegations of people creating fake businesses and stealing identities to fraudulently obtain PPP funds. The Justice Department has already charged 57 individuals with attempts to steal a total of $175 million. Unfortunately, this also means there will be individuals who face wrongful fraud charges and accusations against them. If you or your company is being investigated for fraud related to a PPP loan, you’ll want to have a PPP loan fraud defense law firm in Tampa like The Rickman Law Firm by your side.

What Is Constituted as PPP Loan Fraud?

As with any federal program, there are a number of acts and omissions that have the potential to lead to allegations of fraud. This includes inadvertent mistakes, such as accidentally providing inconsistent information in your application or supporting documents, and intentional misrepresentations, such as misrepresenting the number of employees at your company in order to be eligible for the PPP loan. Below is a list of types of PPP loan fraud that may result in you facing serious legal consequences. If you have been contacted by a federal agent or other official about anything related to a PPP loan, we advise you to first contact a PPP loan fraud law firm in Tampa before discussing your business, application, or PPP loan.

PPP Loan Application Fraud

The Paycheck Protection Program specified eligibility criteria for any small businesses looking to apply for a loan under the program. Any business that presents false or inaccurate information on their loan application to be fraudulently eligible is more likely to face prosecution. Here are just a few examples in which an individual could falsify information on their application and, thus, be held accountable for PPP loan application fraud.

  • Understating the number of employees to fall below the 500-employee threshold
  • Misclassifying employees as independent contractors to fall below the 500-employee threshold
  • Misrepresenting your company’s payroll costs in order to increase the amount of the PPP loan
  • Applying for a PPP loan using another person’s identity

Loan Stacking

Loan stacking occurs when an individual applies for PPP loans from multiple lenders. Those who engage in loan stacking are likely to be persecuted as the federal government has the capacity to track the distribution of all funds from the Paycheck Protection Program. Companies that receive funds from more than one lender will be quick to be targeted.

Fraudulent Loan Certification

Aside from the eligibility criteria previously described, companies applying for a PPP loan are also required to certify specific facts. The mandatory certifications for companies looking to be eligible for PPP loans include:

  • The PPP loan was required to support ongoing operations in the midst of economic uncertainty
  • The allocated PPP funds are only be used to retain workers and maintain payroll, lease, mortgage, and utility payments
  • The company is only receiving one loan under PPP
  • The supplied information is true and accurate

Any certifications made in bad faith or falsified information could be used as evidence for prosecution.

Contact a PPP Loan Fraud Law Firm Regarding Fraudulent Use of PPP Loan Funds

Last but certainly not least, any company that uses the allocated funds for any purpose other than the ones specifically outlined in the PPP will be leaving themselves vulnerable to allegations of PPP loan fraud. What companies need to do in order to demonstrate they were in compliance with this requirement remains somewhat unclear. The best thing to do for the time being is to thoroughly document the source of payment for all eligible and non-eligible expenses that can be accessed in the event of a federal investigation or audit. In the event that you need to speak with an attorney regarding defense against a PPP loan fraud audit or investigation, reach out to a PPP loan fraud law firm in Tampa as soon as possible.

For a free consultation with a PPP loan fraud defense law firm 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.

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