Federal Paycheck Protection Program Fraud Charges in New York

In response to the COVID-19 pandemic, Congress enacted the CARES Act in March 2020, which included the Paycheck Protection Program (PPP) to boost the economy, help businesses remain open, and fight unemployment. The initial authorization included $349 billion in forgivable loans, which was followed up with another $284 billion in December 2020 due to the program’s initial success.

In essence, the PPP provided business owners with a non-recourse loan to cover certain business-related expenses, primarily employee salaries, incidentals and rent. As long as the funds were utilized as directed by the program, then the loan and any interest was forgiven and treated as a grant.  As with many disaster relief programs created by the federal government, allegations of fraud and program misuse now run rampant and are being investigated. If you are facing federal paycheck protection program fraud charges in New York, you should reach out to the defense attorneys at the Law Offices of Jeffrey Lichtman as soon as possible.

How to Get a PPP Loan

To obtain a PPP loan, a qualifying business was required to submit a loan application, signed by an authorized representative of the business.  The PPP loan application required the business, through its representative, to acknowledge the program rules and make affirmative certifications in order to be eligible to obtain the funds. Given the pressure to get money into the hands of business owners, there was little auditing completed by loan processors prior to issuing PPP funds. As a result, the applications were frequently approved on a very thin showing.  Now, however, investigators are reviewing the loan applications after the fact, resulting in a flood of federal probes and arrests where funds were misused or issued based on false and fraudulent representations.

How PPP Fraud Has Occurred

The Department of Justice has already initiated a number of prosecutions involving PPP funds wherein individuals submitted one or multiple loan applications in the names of fake or newly created businesses while falsely claiming to have numerous employees earning wages.  Seee.g.U.S. v. Jorge Abramovs, 21 CR 27 (D. NV).  In this scenario, the PPP funds purportedly utilized for wages are instead utilized for personal or other non-qualifying expenses.  The entire PPP application is then treated as a fraud by federal prosecutors in New York and the defendants are commonly charged with wire fraud, in violation of 18 U.S.C. § 1343, and bank fraud, in violation of 18 U.S.C. § 1344.  Seee.g.United States v. Pan, 20 CR 436 (E.D.N.C.).  A conviction for either may be punished by up to 30 years imprisonment.  Defendants in these cases are also frequently charged with money laundering, in violation of 18 U.S.C. § 1956.  See id.  A conviction for this offense carries with it a maximum term of up to 20 years imprisonment.

Even for otherwise legitimate companies receiving PPP aid, there has been federal scrutiny and threats of criminal prosecution that require the involvement of attorneys. These matters typically involve real businesses that receive PPP funds to assist with employee retention and other expenses when it is clear that the business does not actually require any assistance.  In these cases, even if the business is legitimate and expenses are not inflated, there still may be criminal liability if there was a material misrepresentation in the PPP loan application.

Speak with a New York Attorney About Federal PPP Fraud Charges

Given that a conviction for a single count of wire fraud or bank fraud may carry a sentence as high as 30 years imprisonment, a top federal criminal defense attorney should be retained immediately if you or a loved one has been charged with federal paycheck protection program fraud in New York. Lawyers at the Law Offices of Jeffrey Lichtman have successfully handled countless federal fraud cases, so contact us today for help with your case.

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