Several charges could fall under PPP loan fraud. The most common we see is wire fraud, which is any fraudulent scheme put into place to unlawfully obtain funds through electronic transmissions like wire transfer, direct deposit, or similar methods.
What Can PPP Loan Funds Legally Be Used For?
There are only four categories of expenses that PPP loan funds can legally be used for: payroll, utilities for a business, rent, or mortgage interests (not mortgage principal). Anything outside of those four categories is prohibited. If anyone uses funds to pay for things outside of those categories, they can be subjected to extra scrutiny from the SBA, federal authorities, and potentially face federal charges for fraud.
What Will Happen If PPP Loan Funds Are Misused?
If federal authorities think that the misuse was intentional, you may be charged criminally with wire fraud or another type of fraud under federal law. This will result in a federal criminal indictment, the potential of a federal criminal trial, and federal conviction and sentencing.
What Should Lenders Or Borrowers Expect If They’re Contacted By Investigators Regarding Their PPP Loan Or Loan Applications?
Borrowers are the ones that are more in the crosshairs for federal investigators. They can expect several things if they come under investigation. First, they might receive a federal subpoena for information related to a grand jury. This subpoena will most likely be served on them by a federal agent. The subpoena is going to direct them to turn over certain documents to a federal grand jury or potentially even appear for in-person testimony. That’s a big red flag for potential clients that they need to contact an attorney because they might be under federal investigation.
Beyond that, they could also be contacted directly by federal agents who could show up at their home or place of business to talk to them in person. The final thing that could happen is they could very well just be arrested without any prior notice.
What Are My Obligations To Comply With The Request From Investigators In A PPP Loan Investigation? How Much Information Do I Have To Give Them?
That’s going to be dependent on the circumstances of each case. The only time you may be required to give information is to answer a subpoena directed at a business. To determine the issue, you must contact an attorney to discuss your options when responding to a subpoena. As far as how much information you are obligated to give tan investigator verbally, it is none. never talk to an investigator without an attorney present or without talking to an attorney first. Many people think they can talk their way out of such problems, but in reality, what they do is make matters worse. If you agree to talk to a federal investigator and lie to them the may be facing additional charges. If it a common tactic for investigator to ask questions that they already know the answer to in the hopes that you will lie and give them cause for an arrest.
What Evidence Could Help Or Hurt My Defense In A PPP Loan Fraud Case?
Each case is different, so you have to look at all the evidence for and against each claim. In general, any evidence that shows that a client lacked the intent to defraud will be beneficial. If you have any communications with someone who filled out the applications and it wasn’t the client, that’s also very helpful. If a business partner was responsible for filing out the loan paperwork, that could also help the case. Any evidence that shows a lack of intent to defraud or a disconnect from the application process will help support any defense for a PPP loan fraud.
For more information on PPP Loan Fraud In Florida, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (305) 791-6529 today.