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Business Owners Accused of Fraud for Participating in the Federal Paycheck Protection Program

Criminal Defense Lawyer Miami Izquierdo Law FirmAs a small business owner, you have been hit hard by the economic shutdown caused by the coronavirus pandemic. If you sought relief through the federal Paycheck Protection Program (PPP), you might have saved your business, but you might also be worried about paying the money back or, worse, being accused of fraud for applying for a loan. As criminal cases start to surface after the first wave of loan approvals, confusion over who should be getting the funds and who shouldn’t grows. We take a look at the program, recent federal criminal cases, and how to protect yourself if you are being investigated.

What Is the Paycheck Protection Program Supposed to Do?

As part of the CARES Act, a massive aid bill passed by Congress in March, the Paycheck Protection Program (PPP) offered eight weeks of cash flow through federally guaranteed loans to small businesses. The intention was to help employers affected by COVID-related closures meet payroll costs and keep people employed. The plan got off to a very bumpy start, with over 21 million businesses applying for a share of the $349 billion and only around 6 percent of them getting approved for a loan. It soon came out that while the plan was supposed to help small businesses, large public corporations were getting them instead. These companies included the restaurant chains Shake Shack, Ruth’s Chris Steakhouse, and Potbelly. Even the Los Angeles Lakers secured a $4.6 million loan under the program.

Shortly after this news hit the airwaves, the feds began filing criminal charges related to fraudulent PPP applications.

How a Poorly Run Program Led to Fraud Charges

There is little doubt that the rollout of the PPP was a disaster. With little guidance and no oversight, banks were free to grant PPP loans to whoever would net them the most profit. A multi-million dollar loan to a large corporation was more profitable to a bank than a $50,000 loan to a local restaurant. The money quickly ran out, even as the bad publicity forced some companies to give the money back. In addition, loans were processed so quickly that many fraudulent applications were approved. As a result, federal investigators started looking into possible cases of fraud and making arrests.

In the first arrests related to the PPP, two men in New England received $543,881 in PPP funds by falsely claiming to have dozens of employees working for four different businesses. The men were charged with multiple counts, including conspiracy to make a false statement, conspiracy to commit bank fraud, aggravated identity theft, and bank fraud. In another case in Georgia, the sole owner of a trucking company claimed to have 107 employees and successfully applied for a $2 million loan. The feds became suspicious when he spent $1.5 million in just a few days.

Federal investigators and the Department of Justice have said that they will continue to investigate suspicious PPP loans and will “quickly prosecute” people they suspect of fraud. Typical charges in these cases include wire fraud, bank fraud, false statements to a financial institution, and false statements to the Small Business Administration (SBA).

What Does This Mean for You as a Florida Business Owner?

In late April, the Paycheck Protection Program was extended, and some key changes were implemented. As business owners continue to apply for loans, you can be sure that the feds are keeping a close watch. If you are a small business owner in the Miami area who has applied for a PPP loan, or you have already received the money, you could be under suspicion and may be questioned by federal investigators. Despite the actions of unethical corporations and other criminals, legitimate business owners have a right to defend themselves if they are accused of fraud for taking a loan.

Have You Been Charged With A Federal Crime?

If you've been charged with a federal crime you need to speak with an experienced federal crime attorney as soon as possible. Contact me online or call me at my Miami office directly at 305.707.7345.

 

Daniel Izquierdo
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Coral Gables defense lawyer helping clients accused of Federal Crimes, DUI, Domestic Violence & Sex Crimes.