Despite Confusion, IRS CI Continues To Target PPP Loan Fraud in 2023

Posted in News, Offshore Account Update on January 20, 2023 | Share

IRS Criminal Investigation (IRS CI) is continuing to target Paycheck Protection Program (PPP) loan recipients in 2023. It has announced multiple cases in just the first few weeks of 2023, and all indications are that 2023 will be a busy year for PPP loan fraud enforcement.

This is true despite the widespread confusion surrounding the program. From the application eligibility criteria to the requirements for loan forgiveness, the U.S. Small Business Administration (SBA) has repeatedly revised its guidance for PPP loan applicants and recipients. While there is no question that many individuals and businesses have taken advantage of the program, it is equally clear that many loan recipients were—and are—very confused.

From IRS CI’s perspective, however, any confusion surrounding eligibility for PPP loans or the proper use of PPP loan funds should have caused PPP applicants to exercise caution, not cast doubt aside. But, this perspective conflicts with the reality of the times—when many businesses simply couldn’t wait to find out if the SBA was going to change the rules (again) with regard to loan or forgiveness eligibility.

Recent Examples of IRS CI Paycheck Protection Program Fraud Investigations

Even so, IRS CI is not hesitating to initiate investigations and refer cases to the U.S. Department of Justice (DOJ) when it determines that criminal charges are warranted. Here are some recent examples:

  • Tax Preparer Pleads Guilty to PPP Fraud – On January 4, 2023, IRS CI announced that a tax preparer has pleaded guilty to PPP loan fraud. According to the press release, the tax preparer instructed others on how to prepare false tax returns and submitted false financial documents in support of her own $18,000 PPP loan application.
  • $100,000 PPP Loan Recipient Charged with Fraud – On January 10, 2023, IRS CI announced charges against an individual who is accused of fraudulently securing a $100,000 PPP loan. According to the press release, the defendant made “several false representations” in his PPP loan application, including representing that his business had eight employees when it had none and representing that the business would use the loan proceeds for qualifying expenses when he instead intended to use them for personal purposes.
  • 8-Year Prison Sentence for Recipient of $7.2 Million in Fraudulent PPP Loans – On January 12, 2023, IRS CI announced the conviction of an individual who fraudulently secured more than $72 million in PPP loans by submitting false W-2 forms and other fraudulent documents. According to IRS CI, the individual falsely claimed to own a business with 411 employees and used the PPP loans to purchase luxury vehicles and a 12-acre estate.
  • Man Pleads Guilty to Submitting 241 Fraudulent PPP Loan Applications – On January 13, 2023, IRS CI announced that a man has pleaded guilty to running a fraudulent scheme that resulted in the submission of “at least 241” fraudulent PPP loans. As alleged in the press release, the individual “devised a scheme to solicit others to fraudulently apply for Paycheck Protection Program (PPP) loans” and charged fees paid out of the funds secured.

Schedule a Confidential Consultation at Thorn Law Group

If you need legal representation for an IRS CI investigation (or if you are concerned about facing allegations of PPP loan fraud), we encourage you to contact us promptly. To request a confidential consultation with federal tax defense attorney Kevin E. Thorn, Managing Partner of Thorn Law Group in Washington D.C., call 202-349-4033, email or send us a message online today.

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