PPP Fraud Indictments

The Feds are Handing Out PPP Fraud Indictments! Oh Shit! Am I on the List?

Did you miss the PPP? You can still apply for the EIDL loan

When the Small Business Administration (SBA) launched the Paycheck Protection Program (PPP), they expected some fraud since there are always people who try to game the system.

The program was rolled out quickly to ensure small businesses could continue to survive the first wave of the COVID-19 pandemic. However, the extent of PPP fraud is astronomical. As of September 10, 2020, a total of 57 people have been charged with fraud for attempting to steal $175 million in PPP funds.

For example, a Florida man was accused of buying a $318,000 Lamborghini with PPP funds. Another man was accused of obtaining relief funds in the name of a business he closed two years prior – funds he used to buy a Harley Davidson. Others have been accused of using PPP funds for home renovations and vacations.

The Paycheck Protection Program was created to help business owners pay their employees and cover business expenses during the economic shutdowns caused by the coronavirus pandemic. However, an alarming number of approved applicants have misused the funds. If there’s any indication of potential fraud, the feds are erring on the side of caution and handing out indictments.

Will you be targeted for an indictment? It’s possible

The Extent of PPP FraudThe scary truth is that nobody is immune to being targeted with an indictment. However, if you’re not guilty of fraud, you shouldn’t have to worry. Many people are charged with crimes they didn’t commit and although it’s a pain to have to go to court, you’ll be fine if you can prove you didn’t misuse the funds.

…the extent of PPP fraud is astronomical. As of September 10, 2020, a total of 57 people have been charged with fraud for attempting to steal $175 million in PPP funds.
If you planned on applying for loan forgiveness, you should already have all the documentation you need to prove you didn’t misuse the funds. To qualify for loan forgiveness, you need to provide documentation proving you spent the money on approved expenses like payroll and rent. That same documentation can be used to clear any charges of fraud.

Remember that an indictment doesn’t equal a conviction and not everyone being indicted for fraud is guilty. If you’re charged with fraud, you’re still entitled to due process.

Some indictments are triggered by spending personal funds

If you’re being charged with fraud because you spent a significant amount of personal funds at the time you received PPP funds, it’s not impossible to defend yourself. For example, a roofer was charged with fraudulently obtaining $2 million in relief funds, some of which he was accused of using to buy a boat.

The accused roofing business owner says he spent the relief money, plus an additional $1.5 million on payroll costs to employ 50 workers, which including rehiring employees previously laid off and furloughed. He also purchased a boat, but claims the purchase was not made with PPP funds. If he’s telling the truth, he will have an easy time providing all the required proof. His trial is set for November 2, 2020.

Your personal money is nobody else’s business

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As a business owner, you’re entitled to keep your business and personal finances separate. You might have millions of dollars in your personal bank account while your business struggles to make ends meet. You aren’t obligated to use your personal money to fund your business. Having millions of dollars in your personal bank account doesn’t mean you fraudulently obtained a PPP loan for your struggling business.

If you made a large personal purchase, but spent your PPP funds on approved expenses, all you need to do is provide proof to the court.

The Paycheck Protection Program has ended

Although the initial PPP was extended through August 8, 2020, it has now been closed. Since the deadline was extended, we can expect to see the number of fraud cases rise in the coming months as more suspicious spending is discovered.

Did you miss the PPP? You can still apply for the EIDL loan

If you missed out on the PPP, you can still apply for the Economic Injury Disaster Loan program to obtain up to $10,000 in funds. Unlike the PPP, these loans are automatically forgiven. However, if you receive the PPP loan and the EIDL loan, the EIDL loan stipulates that you can’t use the funds for expenses you’ve covered with the PPP loan. For example, if you use the PPP loan for payroll, you cannot use EIDL funds for payroll.

Do your due diligence with economic relief loans

No matter what loans you apply for and/or receive, make sure to read all the fine print and follow the rules to the letter. Don’t try to game the system – you will be caught. It doesn’t take much for the feds to go after people for fraud. Even if you make an unintentional mistake, you could still face charges and possibly a conviction.

If the terms of obtaining funds are challenging to understand, consult with a lawyer before spending any of the money. Keep yourself and your business safe from the hassle of getting dragged to court for an honest mistake.

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