The PPP Loan Scheme has seen an un-precedent deluge of white collar crime and accusations of fraud. Of $780 billion in forgivable loans disbursed by the beginning of May, a staggering 84 billion in fraud is estimated. Even though the program allowed 1.34 to be distributed in 1.34 million EIDL loans and grants, it was battered with 750,000 referrals for suspected identity theft and more than 585,000 referrals for other potentially fraudulent activity. One of the most common ways of exploiting the programs has been through identity theft. . Some Massachusetts business owners find themselves investigated for white collar crimes that were committed using stolen business and personal identities. The program has resulted in mass confusion and business owners may also have made errors that cause them to be investigated for serious crimes such as fraud.
The two major pandemic assistance programs were the PPP (Paycheck Protection Program) loans and advances and the EIDL (Economic Impact Disaster Loan) relief loans and grants. There are many ways a business owner may find themselves investigated for PPP Loan fraud.
You might use funds for the wrong purpose. The PPP and EIDL programs are very specific about what funds can be used for. The Paycheck Protection Program for example is just what it sounds like – designed to help employers keep employees on the payroll. It can also be used on other specific expenses for the business. The loans can be forgivable if 60 percent is used on the payroll. It can be easy for business owners to keep poor records, underestimate or overestimate the amounts spent on items, or mix business and personal spending, particularly if they are operating a very small business that runs out of their home. EIDL Loans or forgivable grants have different acceptable uses than PPP Loans, and many business owners are confused by the definition of “working capital” that defines what EIDL loans should be spent on. Business owners may also become confused if they are receiving funds from the EIDL and PPP program, as you can’t use an EIDL for the same purposes as a PPP Program. When you are a small business the administrative burden of keeping up with these criteria can lead to mistakes and confusion.
Unfortunately, your mistakes could cost you a lot more than you have bargained for. The EIDL funds are issued through the SBA and the US Treasury, but the PPP funds are issued through SBA approved financial institutions. If you misrepresent your business in communications with your bank you could be accused of serious crimes such as bank fraud, false statements to a financial institution and even in some cases wire fraud. Depending on the severity of the accusation you could be facing charges for a federal crime and potentially years in prison. Even if the charge is less serious, the fines and damage to your reputation could impact your business.
If you are accused of PPP Fraud or any other white collar crime in Massachusetts related to Pandemic relief for your business, you should contact a Massachusetts White Collar Criminal Defense Attorney immediately. Given that these charges hinge on intent and evidence, it is crucially important to be careful about your communications and have an attorney advise you on how to get your business records in order or track down vital communications. Sometimes all it takes is poor record keeping or a mistake on official forms to bring a charge of a serious white collar crime. Dhar Law is here to help you defend your business and your reputation if you are accused of PPP Loan fraud contact us today at