ppp loan fraud lawyers
1. Stacking of Loans
A specific type of potential PPP fraud described by the Office of the Comptroller of the Currency (OCC) is what is known as “loan stacking.” This is when an applicant secures PPP funds from more than one lender. The OCC has stated its intention to concentrate on this brand of fraudulent conduct, and because the government can track all PPP loan disbursements, entities that accepted funds from multiple lenders may find themselves the target of such an investigation.
2. Application-Related Fraud
Eligibility for PPP loans was assessed according to a range of criteria. Entities that are found to have falsified application information as a way to fraudulently obtain funds through the program may also be vulnerable to prosecution. Misrepresented information could include things like the company’s total number of employees, fraudulent classification of employees as independent contractors in order to meet the eligibility threshold, misrepresentations regarding Small Business Administration business size standards, or submission of fraudulent company payroll costs to boost the available loan amount.
3. Loan Certification Fraud
Applicants for loans under the PPP also needed to attest to the truth of a series of facts. Such certifications needed to be rendered in good faith, and if they are found not to have been, federal fraud charges are possible. PPP certifications included attesting to the economic need for the funds in order to continue operations, certification that the loan would be used to continue paying workers or to make lease, mortgage, or other overhead payments, that no other PPP loan had been or would be obtained, and that all information offered in support of the application was true.
4. Impermissible Use of PPP Loan Proceeds
Any recipient of PPP funds are required to use them for four purposes only, namely, to make payroll (including benefits), for mortgage interest pyaments, for rent payments, and/or for utility payments. In terms of rent, utility, and mortgage interest costs, PPP money may only be utilized to pay obligations that arise prior to February 15, 2020. Entities that are found to have used the funds for additional purposes may be subject to a fraud investigation.
Because of this, it is wise for companies that were granted PPP loans to fully document how all expenses were paid during the relevant time period into order to ensure compliance should an investigation arise.
5. Fraudulent Use of PPP Funds
It is worth nothing that the PPP’s terms provide that no personal guarantee is required in order to receive a loan, but if proceeds are ultimately used in fraudulent ways, the federal government can pursue criminal charges against involved individuals. This is not insignificant, because according to the False Claims Act, it is possible to receive upwards of five years’ incarceration in addition to hefty fines if found guilty of fraudulently securing PPP funds. For those engaged in more substantial fraud, it is possible that multiple criminal charges will be lodged, exposing the accused to lengthier prison terms and fines into the millions.
6. Fraud in Seeking Loan Forgiveness
The PPP is known for having a very low rate of interest, but still, there are many entities that will find themselves eligible to have their loan balances forgiven. To secure forgiveness, companies need to certify that they have met all eligibility terms on an ongoing basis and that their PPP funds have been used in an authorized manner. Part of this certification is an attestation that all supporting documentation is true. Failure in this realm can also be a predicate for a fraud investigation.
7. Concealment or Misrepresentation During PPP Investigation
The Justice Department, the FBI, and a number of additional federal agencies will be tasked with performing fraud investigations and audits related to companies’ use and handling of PPP funds. Should your company find itself the subject of such a probe, it is essential that care is taken to prevent the disclosure of potentially concerning material. At the same time, however, it is vital that no misrepresentations or attempts to conceal key facts are made. False statements to federal law enforcement agencies in and of themselves comprise a type of fraud that can lead to federal prosecution.
If an Investigation Should Arise
If you learn that your company will be the subject of a PPP audit or criminal probe, it is critical that you engage the services of an experienced team of federal criminal defense attorneys immediately. There is no time to waste when it comes to preparing your response. The stakes are very high when it comes to fraud allegations of this nature, so it is best to leave nothing to chance.