5 Steps to Navigate PPP Loan Fraud Case to Avoid Federal Prison

The Department of Justice (DOJ) continues to target business owners receiving US government Covid-19 economic stimulus loans. At this time, there are thousands of open criminal investigations and prosecutions based on loans under the federal Paycheck Protection Program (PPP). Congress has flagged billions of dollars in PPP loans as suspicious. As a result, the DOJ continues to hire dozens of prosecutors specifically to pursue cases of PPP loan fraud.

Anyone receiving a PPP loan will want to stay tuned. The target of any government investigation needs to be proactive to mitigate the short and long-term negative impact that such investigations can leave behind. Risks and consequences vary case by case. However, there are common strategic steps to help business owners navigate PPP loan fraud cases and achieve better outcomes. Learning about all the stages of the criminal process — from investigation to sentencing, including sentence reductions and post-conviction strategies (such as early release) — can make a significant difference in the overall results. This blog post and accompanying video provide a brief overview on triggers for PPP loan fraud investigations.

TRIGGERS FOR PPP LOAN FRAUD INVESTIGATIONS

Several government agencies investigate PPP loan fraud. The Small Business Administration (SBA) is the primary agency disbursing PPP loans and is the lead investigator in many ongoing cases. The FBI, DOJ, and the Treasury Department are also investigating.

Any of the following can trigger a PPP loan fraud investigation:

Misuse of loan proceeds
False application documents
Multiple applications for PPP loans
Banks’ reports of suspicious transactions
Whistleblower reports
Random audits

MITIGATING EXPOSURE
Are you a business owner worried about exposure to PPP loan fraud investigation?

In that case, we recommend 5 steps that could make the difference between probation or the 11-year prison sentence a Texas man just received for PPP loan fraud. The DOJ is aggressively pressing for significant prison terms in the vast majority of these cases. Anecdotally, 36 to 41 months is a common sentence in PPP loan fraud cases.

Step 1: Be Proactive & Honest
Concerned business owners should be proactive. Start by taking an honest and realistic assessment of the situation. Many people believe they may be at risk of a PPP loan fraud investigation but choose to hide their heads in the sand. That is rarely a good strategy. It leaves them in a reactive, not proactive, posture.

Step 2: Talk to Experienced Counsel & Consultants

As such, the second critical step we recommend is confidential talks with potential lawyers and consultants, who have extensive experience with white-collar crime investigations and sentencing issues. PPP loan fraud cases stem from federal law. An attorney who specializes in state cases may not be suited for a PPP loan fraud case.

Step 3: Talk to Sentencing Mitigation Consultants
Having a sentencing mitigation team from the outset can greatly improve likely outcomes. However, many clients opt for consulting sentencing mitigation experts later in the process. It bears repeating that earlier is better when engaging sentencing mitigation experts.

Step 4: Create Post-Sentencing Strategy
When sentenced to a prison term, there are still many strategies to implement after the sentencing hearing to lower the time spent away from home in federal prison. Our team is familiar with all the Federal Bureau of Prisons jobs and programs to help inmates gain skills while incarcerated, earn programming credits, and return home sooner.

Step 5: Take Charge of Re-Entry Plans
People can bounce back from a criminal conviction and prison term. Defendants must define success, set their priorities, and create a self-driven plan. No doubt, a criminal investigation or prosecution can be very disruptive. However, people can and do emerge from the federal criminal justice system and rebuild their lives by executing a carefully crafted personal plan for success.

CONCLUSION
The target of any government investigation, including PPP loan fraud, should be proactive to mitigate the short and long-term negative impact that such investigations can leave behind. Risks and consequences vary case by case. However, there are common strategic steps to help business owners navigate PPP loan fraud cases and achieve better outcomes.