We all had to make our own way in business when the Covid-19 pandemic upended the U.S. economy in the spring of 2020. Millions of businesses struggled to remain afloat. Although delivery services, outdoor dining, and a host of other creative accommodations evolved to support the gradual “re-opening” of the nation by mid-2021, the fact is that throughout 2020, millions of people rarely left their homes for any reason other than true necessity. As a result, businesses that counted on individuals to walk through their doors tended to flounder most profoundly. So many of us were struggling then. Now, some individuals and business are struggling with fighting off DOJ prosecution. Our federal white collar crime attorneys at the Cofer Luster Law Firm are helping those tangled in investigations and prosecutions for PPP loan fraud. We can help you.
As part of its broader efforts to keep the economy running until the pandemic eventually stabilized and began to wane, the federal government passed The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in 2020. Part of the $2.2 trillion economic stimulus bill was the Paycheck Protection Program (PPP). Unfortunately, as is often the case with bailout money and funds earmarked to help those who are in a particularly vulnerable position, scam artists targeted the PPP as a way to serve their own ends. In its efforts to track down individuals who acted with truly fraudulent intent, the government has accused some well-meaning small business owners and non-profit administrators of PPP fraud.
What Is PPP Fraud?
The Paycheck Protection Program allowed eligible small businesses and non-profit organizations to benefit from forgivable, federally guaranteed loans in exchange for maintaining a significant portion of their payroll (as well as later hiring laid-off workers back) for a certain period during some of the worst months of the pandemic. So long as the payroll criteria for the PPP had been met, qualifying enterprises could use their loans for rent, utilities, and other specific expenses in addition to covering wages and benefits. If borrowers followed all the requirements of the programs, their loans could be forgiven up to 100% of the amounts that they borrowed.
Most PPP fraud cases can be classified into two broad groups:
- Those who submitted false information when applying for a PPP loan; and
- Those who submitted false information when attempting to certify their efforts to secure forgiveness for their PPP loans.
Additionally, some individuals and entities have been charged with fraud due to allegations of loan stacking – which involves applying for PPP funding from numerous lenders – and for using PPP funds for purposes that are not approved by law.
Again, there is no question that some business owners have intentionally tried to defraud the PPP system. But there have also been so many business owners who have been caught in the crosshairs simply because both the initial application process and the loan forgiveness certification process are complex, nuanced undertakings and it isn’t hard to make a mistake when dealing with this kind of challenging and extremely consequential paperwork. Our white collar criminal defense attorneys are here to fight the federal government’s efforts to prosecute you or your business.
DOJ Enforcement Efforts
In May of 2021, the U.S. Attorney General established the Covid-19 Fraud Enforcement Task Force to investigate, combat, and prevent fraud related to the pandemic. PPP fraud has been one of the most important priorities of the task force and related law enforcement efforts aimed at Covid-related financial fraud.
Less than one year after the creation of the task force, the Justice Department named a director for Covid-19 Fraud Enforcement. This individual is tasked with leading the agency’s criminal and civil enforcement efforts. At the time that this announcement was made in early March of 2022, the DOJ had investigated thousands of individuals and entities for Covid-related fraud totaling more than $6 billion.
Although the PPP program wrapped up in mid-2021, the DOJ continues to prosecute those whom it suspects were engaged in fraudulent application practices, loan utilization, loan certification efforts, and other activities classified as PPP fraud. If you believe that you are under investigation for PPP fraud, it is important to seek legal guidance proactively. Getting out ahead of your situation could ultimately make or break any case that the state decides to file against you. Unfortunately, many people or businesses rely upon the well-intended advice of their civil lawyers or accounting professionals. We cannot stress enough the importance of getting a federal white collar criminal defense attorney involved in your matter immediately. If the situation is handled properly, often we can avoid criinal prosecution all together.
Responding To Allegations Of PPP Fraud
Because PPP fraud is generally classified as mail fraud, wire fraud, bank fraud, identity theft, or some combination of these, there is generally an element of intent that must be proven to rightfully convict someone who has been accused of wrongdoing. Federal mail and wire fraud statutes are concerned with fraudulent intent that occurs when a representation is “made with reckless indifference to its truth or falsity.”
Case law has clarified that “misrepresentations amounting only to a deceit are insufficient to maintain a mail or wire fraud prosecution.” This means that if it cannot be proven that someone who has been accused of PPP fraud engaged in reckless indifference as to the validity of their representations – or made misrepresentations intentionally – they generally cannot be held accountable for submitting information to the government that is merely incorrect. The law and procedures in these white collar criminal cases are arcane. You need a federal criminal attorney helping as soon as possible.
Different standards are applied to charges filed under bank fraud and identity theft statutes, but the general idea that intent to deceive must be proven to some degree holds true in all fraud cases. This is just one of the reasons why it is so important to connect with a knowledgeable lawyer if you have been charged with PPP fraud. Having a skilled advocate by your side will allow you to benefit from their knowledge of how to build a solid defense strategy. Chances are good that picking apart the state’s case concerning intent is going to serve as a significant aspect of any strategy designed to help you maintain your innocence generally and your freedom specifically.
Another reason why it is important to seek legal guidance proactively if you’re under investigation for PPP fraud or you’ve already been charged with wrongdoing is that the potential consequences you’ll face if you are convicted are significant. Mail, wire, and bank fraud convictions could keep you from working in certain industries ever again. A conviction could lead to a public relations nightmare for you and your company. And, depending on the nature of any charges that are filed against you, you could face from five to 99 years in federal prison and fines totaling up to $1 million. Although the concept of white-collar crime is often treated as a joke in popular culture, the potential consequences of a white-collar conviction are not to be treated lightly.
If you’re being asked to speak with federal agents, you need to speak with an attorney about how to safeguard your rights and legal options. Do not speak with anyone without talking to your criminal defense attorney first. And should you find that you’re under arrest, you have the right to remain silent until your lawyer is present. If you start answering questions – any questions at all – before your attorney arrives, law enforcement officers do not have to respect your right to remain silent any longer. It is, therefore, vital that you insist upon contacting your attorney as soon as you’ve been arrested so that you can start benefitting from aggressive advocacy on your behalf as soon as you possibly can.
Connect With A Knowledgeable Texas PPP Fraud Lawyer Today To Learn More
If you are under investigation for PPP fraud or fraud related to other Covid-19 funds, the time to speak with an attorney is now. Similarly, if you have already been formally charged with PPP fraud, you need the benefit of an experienced and reputable lawyer by your side who will aggressively advocate for your interests. The potential consequences associated with a conviction are life-altering. You deserve the greatest possible opportunity to present a strong defense against the charges that you’re facing.
Given the stakes of your situation, you shouldn’t trust the creation and execution of your defense strategy to just anyone. The lawyers at The Cofer Luster Law Firm have been named some of the top attorneys in Fort Worth, Texas, by Fort Worth Magazine. With decades of combined experience, we understand how to get results for our clients. Although no law firm can guarantee the outcome of a particular case, we believe that our track record and reputation speak for themselves. We practice throughout the country in federal courts.
To learn more about our firm’s approach to representation and about your rights and options given the circumstances that you’re facing, it’s time to schedule a confidential, risk-free consultation. You can reach out to our team today by calling (682) 777-3336 or by contacting us online.