Memphis PPP – SBA – EIDL Loan Fraud Lawyers
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Memphis PPP – SBA – EIDL Loan Fraud Lawyers
The COVID-19 pandemic brought unprecedented challenges, and the government responded with unprecedented relief programs like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. While these programs provided a lifeline for many businesses and employees, they also opened the door for significant fraud and abuse. This article will examine PPP and EIDL fraud issues specifically in the Memphis area, the applicable laws, potential defenses, and experienced attorneys who can provide guidance if you are being investigated or charged.
Overview of PPP and EIDL Programs
The PPP provided potentially forgivable loans to small businesses to keep employees on payroll during COVID-19 shutdowns and slowdowns. The EIDL program provided low-interest loans to cover operating expenses that businesses could not meet due to the pandemic. With hundreds of billions of dollars being distributed rapidly under these new programs, oversight and controls were lacking, creating opportunities for abuse.
Some common types of PPP and EIDL fraud include:
- Falsifying employee, revenue, or expense numbers on applications to get larger loans
- “Double dipping” by applying for and receiving loans from multiple lenders
- Using PPP funds for non-allowable purposes like personal expenses
- Lying about being an eligible business impacted by COVID-19
- Identity theft to apply for loans using someone else’s business information
Memphis PPP and EIDL Fraud Cases
The Memphis area has seen its share of PPP and EIDL fraud cases prosecuted by the Department of Justice. For example, in October 2022 a Memphis tax preparer was sentenced to over 2 years in prison for fraudulently applying for over $1 million in PPP and EIDL loans for himself and clients. He falsified documents to make it appear clients operated businesses impacted by the pandemic when they did not.
In another Memphis case, a daycare owner was indicted in February 2023 for allegedly obtaining $3.6 million in fraudulent PPP and EIDL loans as well as making false insurance claims related to arson. The wide-ranging scheme highlights how those inclined towards fraud may exploit multiple programs simultaneously.
A former University of Memphis student was sentenced to over a year in prison in September 2022 for fraudulently applying for $51,000 in PPP and EIDL loans. The student falsified payroll and tax documents to make it appear he had an eligible business. The prison sentence and restitution order demonstrate these are not treated as minor offenses.
Applicable Laws for PPP and EIDL Fraud
Prosecutors typically charge PPP and EIDL fraud under various federal fraud and false statement laws including:
- Wire fraud – 18 U.S.C. § 1343
- Bank fraud – 18 U.S.C. § 1344
- False statements – 18 U.S.C. § 1001
- Aggravated identity theft – 18 U.S.C. § 1028A
The wire fraud and bank fraud statutes prohibit schemes to obtain money or property under fraudulent pretenses, such as submitting false PPP or EIDL applications. The false statements law bars knowingly making false representations in any matter within federal agency jurisdiction, such as falsifying documents and certifications for COVID-19 relief programs.
These charges can lead to severe punishments. Wire and bank fraud carry maximum sentences of 30 and 20 years respectively, while false statements can result in up to 5 years imprisonment. Aggravated identity theft has a mandatory minimum 2-year sentence consecutive to any other counts. Fines and restitution may also be imposed.
Possible Defenses in PPP and EIDL Fraud Cases
Although PPP and EIDL fraud allegations should always be taken seriously, experienced criminal defense counsel may be able to raise viable defenses such as:
- Lack of intent – The government must prove you knowingly committed fraud rather than making an honest mistake.
- No false statements – You may be able to demonstrate applications were accurate based on the information available at the time.
- Return of funds – Repaying loans voluntarily before charges are filed can sometimes persuade prosecutors not to pursue a case.
- Duress – External threats or coercion may negate criminal intent in applying for loans or using funds improperly.
An attorney can carefully examine the facts of your case to determine if any defenses like these apply. The complex rules and uncertainty around PPP and EIDL programs also provide opportunities to argue good faith efforts to comply.
Experienced Memphis PPP and EIDL Fraud Lawyers
Given the severe penalties possible and complexity of these cases, it is critical to engage an experienced attorney immediately if you are being investigated or charged with PPP or EIDL fraud in Memphis. Among the top local defense lawyers are:
- The Spodek Law Group – Offers nationwide representation for PPP and EIDL fraud. Their attorneys include former prosecutors familiar with federal fraud laws.