Legal Defenses & Resources for PPP Fraud
If You are Under Investigation or Facing Charges for PPP Fraud, There’s a Lot You Need to Know
While the Paycheck Protection Program (PPP) was initially hailed as a success for the speed at which it provided funds to struggling businesses during the COVID-19 pandemic, more recently it has been in the spotlight for all the wrong reasons. More than 10 percent of the $800 billion in federal funds disbursed under the PPP went to recipients that didn’t qualify—including recipients ranging from large publicly-traded corporations to individuals who didn’t own businesses at all.
The federal government has taken notice, and now it is aggressively targeting businesses and individuals that received (and even unsuccessfully applied for) PPP loans improperly. Several PPP loan applicants and recipients have been prosecuted in federal court, with these prosecutions leading to multi-million-dollar fines and long-term federal prison sentences in many cases.
Legal Defenses to Allegations of PPP Fraud
When facing allegations of PPP fraud, it is critical to execute a strategic defense focused on the relevant facts and the relevant law. While each case requires a custom-tailored approach, some examples of defense strategies that are generally available in PPP fraud cases include:
- Affirmatively Demonstrating Compliance with the Terms of the PPP – If the government’s investigation is misguided, it may be possible to avoid federal charges by affirmatively demonstrating compliance with the terms of the PPP. While individuals and businesses targeted in federal investigations must be extremely careful about voluntarily sharing information with the government, under the right circumstances, doing so can lead to a favorable resolution. Our team will not only look at whether our clients’ PPP loan applications were truthful, but we will also consider how the funds were used and whether they believed (in good faith) that they were in compliance with the law.
- Challenging the Sufficiency of the Government’s Evidence of Fraud – While affirmatively demonstrating compliance is one option, the government has the burden of proof. So, even if it is not possible to affirmatively demonstrate compliance, it may still be possible to avoid unnecessary consequences by showing that the government cannot meet its burden of proving guilt beyond a reasonable doubt. Additionally, if it is determined that our client was not entitled to or misused PPP funds, our attorneys will work to identify mitigating factors (i.e., no criminal history, psychological conditions, ability to pay back the funds, etc.).
- Fighting to Keep the Government’s Evidence Out of Court – Along with challenging the sufficiency of the government’s evidence, challenging the admissibility of the government’s evidence can be an effective defense strategy as well. Even if prosecutors have the evidence they need to secure a conviction, they won’t be able to meet their burden of proof if they can’t present their evidence at trial.
Additional Resources for Business Owners with Questions About PPP Fraud
The federal government has published several resources for PPP recipients who have questions or concerns about facing fraud allegations. For more information about the federal government’s response to PPP fraud, you can read:
- DOJ Fraud Section Enforcement Related to the CARES Act
- IRS CI COVID-19 Fraud Statistics (Including PPP Fraud)
- SBA’s Handling of Potentially Fraudulent Paycheck Protection Program Loans
Schedule a Confidential Initial Consultation With a Washington DC Tax Attorney at Thorn Law Group
While the government’s resources can be helpful when looking for general information, there is no substitute for custom-tailored legal advice and representation. If you need to know more about the defenses to PPP fraud, we encourage you to call Kevin E. Thorn, Managing Partner of Thorn Law Group at 202-349-4033 or contact us online to arrange a confidential initial consultation.
