Utah PPP – SBA – EIDL Loan Fraud Lawyers

Utah PPP – SBA – EIDL Loan Fraud Lawyers

The COVID-19 pandemic led to huge amounts of federal relief aid flowing to Utah small businesses and workers through programs like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. While this funding provided a critical lifeline during shutdowns and slowdowns, the rapid rollout also created opportunities for fraud in applications for these loans.

In Utah, federal prosecutors have been aggressively pursuing cases against individuals accused of illegally obtaining PPP and EIDL loans using deception. Defendants have faced charges including wire fraud, bank fraud, making false statements and aggravated identity theft. Penalties upon conviction can include years in prison, restitution, and forfeiture.

PPP and EIDL Loan Programs in Utah

The CARES Act established the PPP to offer potentially forgivable loans to small businesses for expenses like payroll, rent, and utilities during COVID-19. EIDL loans help businesses meet operating costs after disasters. The quick disbursal of huge sums led to relaxed controls.

PPP loan applicants had to certify that current economic conditions necessitated the loan, and that the funds would be used to retain workers and maintain payroll. EIDL applicants had to certify they suffered substantial economic injury from the pandemic.

Prosecutors allege defendants made false statements about business details, number of employees, and use of funds. Larger PPP loans were available for bigger businesses, incentivizing inflated figures. Some allegedly created fake firms or stole identities.

Charges and Cases in Utah

Some PPP and EIDL fraud prosecutions in Utah include:

• In July 2020, two Utah residents were charged with bank fraud conspiracy for failing to disclose an applicant was under federal indictment when seeking a $210,000 PPP loan.^[1]
• In June 2021, felony charges were filed against a man for allegedly getting $220,000 in PPP loans for a fake business using a stolen identity.^[2]
• In January 2022, two people pled guilty to wire fraud for a scheme involving submitting dozens of fraudulent PPP and EIDL loan applications seeking over $4 million.^[3]
• In June 2022, a man was sentenced to over 5 years in prison for schemes obtaining $1.1 million in PPP loans using fake businesses.^[4]

These cases highlight the priority federal prosecutors in Utah place on PPP and EIDL fraud enforcement. Penalties depend on the amounts involved but can be severe.

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2024-03-21

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2024-03-18

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2024-03-18

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2024-03-15

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2024-03-15

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2024-03-12

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2024-03-12

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Relevant Federal Criminal Laws

Prosecutors often charge PPP and EIDL fraud under these federal statutes:

• Wire fraud – using interstate wires/communications to execute a scheme to defraud or obtain money by false pretenses. Up to 20 years imprisonment.^[5]
• Bank fraud – scheme to defraud a bank or obtain bank funds via false statements. Up to 30 years imprisonment.^[6]
• False statements – knowingly making false statements related to SBA loan applications. Up to 5 years imprisonment.
• Aggravated identity theft – using someone else’s personal identifying information during a crime. Adds mandatory 2 years imprisonment.

Prosecutors can also pursue civil charges and forfeiture to recover funds obtained through alleged fraud.

Defending Against PPP and EIDL Fraud Charges

Although charges like wire fraud and aggravated identity theft carry potentially severe penalties, experienced federal criminal defense lawyers can challenge the prosecution’s case by arguing:

• You lacked any intent to defraud and made an honest mistake on the loan application.
• You did not make any material false statements on the application.
• The lender failed to follow program requirements and did not rely on your statements.
• You acted in good faith and any errors were minor and unintentional.
• The government is overreaching by charging you criminally for what should be a civil matter.

Counsel can also scrutinize the strength of the evidence and possibly seek dismissal of charges. For defendants who plead guilty, attorneys can advocate for lesser charges or more lenient sentencing.

Avoiding PPP and EIDL Fraud Allegations

The best way for borrowers to avoid PPP or EIDL fraud allegations is to provide accurate information on applications and use funds only for permitted expenses. Seeking legal counsel if you have any concerns about your loan or use of funds may help mitigate penalties down the road. Self-reporting any issues to the lender or SBA could also reduce risks.

Suspected fraud can be reported to the SBA Inspector General or FBI. Whistleblowers may qualify for a reward through the government’s qui tam program.