Federal PPP and EIDL fraud prosecution is on the rise

On Behalf of | Dec 7, 2023 | Criminal defense

The Paycheck Protection Program (PPP) was a federal stimulus program mounted in response to wide-scale business shutdowns and closures beginning in 2020. The government issued PPP loans as a way to help businesses keep their employees on the payroll despite needing to close their doors or drastically reduce their operations.

Unfortunately, early research indicates that the PPP was one of the most fraud-riddled federal programs in recent history. Some researchers estimate that there were $200 billion worth of questionable loans issued under the PPP.

Business owners and executives could be at risk of prosecution as federal authorities begin cracking down on suspected fraud. Misuse of PPP loan funds and misrepresenting a business’s situation on loan paperwork have both been cited as reasons for prosecution.

Not everyone who took loans needed them

The PPP and the Economic Injury Disaster Loan (EIDL) program both sought to keep the economy as strong as possible during a period of unprecedented challenges. Lawmakers rushed to enact programs that could offer relief to struggling businesses and the workers they employed.

Unfortunately, thousands of individuals may have submitted false or fraudulent loan applications. Many of these applications included false statements or exaggerations. Misrepresenting the number of employees the company had, lying about gross revenue and even falsifying the date of the company’s establishment are all acts of fraud that might lead to prosecution for those who obtained federal loans.

Typically, those accused of committing fraud for federal benefits, including business loans, face federal prosecution. Federal prosecutors across the country recently have targeted those who seem to have used the EIDL program or the PPP for personal enrichment. Cases already underway have involved allegations of wire fraud. Those convicted could face up to 20 years in prison for each count of wire fraud in addition to financial penalties that the courts might impose.

Those accused of misconduct related to PPP or EIDL loans will likely need to go over a massive amount of information when planning a defense strategy. They may also face unusual risks, like the unique challenges of facing questioning by federal authorities. Seeking knowledgeable legal support can make all the difference for those facing federal charges over alleged misconduct.

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