San Diego PPP – SBA – EIDL Loan Fraud Lawyers
The COVID-19 pandemic led to an unprecedented level of government assistance for small businesses and sole proprietors. The Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program distributed billions of dollars in forgivable loans and grants to help businesses stay afloat when the economy shut down. However, the speed at which these programs were rolled out also created opportunities for abuse and fraud. Many business owners in San Diego and nationwide now find themselves under investigation and facing criminal charges for allegedly misusing these funds.
If you or someone you know is being accused of PPP or EIDL fraud, it’s critical to understand the allegations and build an effective legal defense strategy. Here’s what San Diego business owners need to know about fighting these charges.
Common Types of Alleged PPP and EIDL Fraud
Prosecutors are aggressively going after a wide range of activities related to the COVID relief programs. Some of the most common allegations include:
- Falsifying information on loan applications such as number of employees, payroll expenses, or revenue losses.
- Using PPP funds for non-allowable purposes like personal expenses instead of payroll.
- Applying for multiple PPP loans through different lenders, known as “stacking.”
- Making false statements to have a PPP loan forgiven.
- Using stolen identities or fake businesses to obtain funds.
- Money laundering – transferring illegal proceeds to conceal their source.
Most cases involve making false statements on the loan application itself. However, prosecutors are also targeting improper uses of funds after loans are disbursed. Some charges even allege conspiracy to commit fraud with accountants, bookkeepers, or co-owners.
Penalties for PPP and EIDL Fraud in San Diego
Depending on the circumstances, potential penalties can range from civil fines and loan repayment all the way up to criminal prosecution:
- Civil False Claims Act – Treble damages plus fines of $11,665 to $23,331 per false claim.
- Criminal Wire Fraud – Up to 20 years imprisonment and a fine of up to $250,000.
- Criminal Bank Fraud – Up to 30 years imprisonment and a fine of up to $1,000,000.
- Criminal Money Laundering – Up to 20 years imprisonment and a fine of up to $500,000 or twice the amount laundered.
Prosecutors often stack charges for maximum leverage in plea negotiations. For instance, an indictment could include multiple counts of wire fraud, bank fraud, false statements, and money laundering. If convicted on all counts, defendants can face decades behind bars.
Building an Effective Defense Strategy
Given the severe consequences, building an effective defense is critical. Here are some key elements to consider:
- Challenging intent – Prosecutors must prove you knowingly provided false information. Evidence showing a lack of fraudulent intent can defeat charges.
- Attacking evidentiary weaknesses – Many fraud cases depend on circumstantial evidence that can be discredited upon closer scrutiny.
- Leveraging compliance efforts – Demonstrating good faith efforts to comply with program rules can rebut allegations of misuse.
- Seeking favorable plea deals – Strong advocacy during plea negotiations can result in reduced or dismissed charges.
An experienced federal fraud defense lawyer will thoroughly analyze the prosecution’s case, identify weaknesses, and formulate the most advantageous legal arguments. They will also guide you through the complex criminal justice process to achieve the best possible outcome.
Avoiding Allegations of PPP and EIDL Fraud
The best defense is a strong offense. Here are some proactive steps businesses can take to avoid problems in the first place:
- Carefully review all loan applications and certifications for accuracy.
- Maintain meticulous records of how funds are used and make adjustments as needed.
- Consult with legal counsel and accountants when unsure if a use is permissible.
- Segregate PPP funds from general operating accounts.
- Be transparent with lenders by promptly reporting any changes that may impact eligibility or forgiveness.
Documenting good faith efforts to comply with program rules can demonstrate the absence of fraudulent intent should any allegations arise.
Choose the Right PPP and EIDL Fraud Lawyer in San Diego
Selecting the right lawyer is the most critical decision in defending against fraud allegations. Be sure to choose an attorney with specific experience in federal white collar criminal defense. Relevant expertise includes:
- In-depth knowledge of PPP, EIDL, and other SBA lending programs.
- Understanding of federal statutes used in COVID-19 fraud prosecutions such as wire fraud, bank fraud, false statements, etc.
- Experience representing clients before federal law enforcement agencies such as the FBI, SBA OIG, IRS, USPIS, etc.
- Proven track record negotiating favorable plea agreements and settlements in fraud cases.
- Litigation skills trying complex fraud cases in federal court when necessary.
Don’t leave your fate in the hands of an inexperienced lawyer learning on the job. The right counsel will aggressively defend your rights and freedom.