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Frequently, those under investigation for PPP fraud are not made aware of the investigation until it has already begun (if they are made aware at all). A request for an interview by federal investigators is the first sign that an inquiry is underway.

Anyone a federal investigator approaches to inquire about a PPP loan should exercise caution and consult with a knowledgeable lawyer. Federal obstruction or false statement charges may occur from making a false statement to a federal agent. People must also be ready if they decide to cooperate with investigators. Even people who have nothing to hide are capable of making statements that are unclear and give the appearance that they do.

If you applied for a PPP loan in Texas and the government is now alleging fraud, the federal criminal defense team at The Law Offices of Thomas J. McHugh, PLLC can help. 

 What Is the Federal Paycheck Protection Program (PPP)? 

The Coronavirus Aid, Help, and Economic Security (CARES) Act, which was passed to offer immediate financial relief to American businesses affected by the pandemic, gave rise to the Paycheck Protection Program (PPP). To assist small businesses maintain their personnel, have access to operating capital, and maintain normal operations, Congress allowed over $950 billion in forgiven loans.

While many small companies relied on these loans to stay operating during the pandemic, the government soon learned that a significant amount of money was obtained fraudulently by individuals who wouldn’t normally be eligible for a loan. Since then, it has actively looked into and prosecuted claims of PPP loan fraud, devoting entire divisions of the Department of Justice to these inquiries.

What is PPP Loan Fraud?

The misuse of PPP funds after they have been obtained or the submission of incorrect information on a PPP loan application are both examples of PPP loan fraud. As was already stated, the PPP was developed to assist businesses in surviving the coronavirus pandemic. To pay for their running costs and personnel, the program provided them with forgivable loans. As long as they are qualified, a business may submit an application for a PPP loan through a commercial bank. If a business is accepted and receives a PPP loan, it is required to abide by certain rules regarding how it can use the money it recently got from the government.

When the government gives money away, fraud frequently follows. Federal inspectors have carefully examined PPP loans, loan applications, and the uses made of PPP funds by enterprises and people. The goal of an initial PPP loan fraud investigation is to ascertain whether any false statements were made in a PPP loan application, whether the funds were used properly, and, in light of these findings, whether criminal charges ought to be pursued for violations of the Paycheck Protection Program’s rules.

Federal prosecutors and agents will typically target a person or business that violated the PPP program’s terms and conditions by engaging in any of the following:

• Submitting false or fraudulent information on a PPP loan application;
• Making applications for a PPP loan from several lenders (loan stacking); 
• Submitting fraudulent loan certification;
• Using PPP funds for an unauthorized purpose (such as their personal use instead of business use);
• Lying to federal age investigators.

What is PPP Loan Application Fraud?

The application process for PPP financing is one of the most frequent locations for PPP fraud. Any PPP loan application that is filled out by a person or a business must be truthful; making false statements or omitting information could result in legal action.

The following are examples of frequent false statements on PPP loan applications:

• the number of employees; 
• the misrepresentation of employees as independent contractors; 
• the false representation that they satisfied the small business eligibility criterion;