Consequences of PPP Fraud

Learn About the Consequences of PPP Loan Fraud from an IRS Criminal Tax Attorney at Thorn Law Group

The federal government is targeting Paycheck Protection Program (PPP) loan applicants and recipients. Due to widespread fraud under the PPP, federal authorities including the U.S. Department of Justice (DOJ) and IRS Criminal Investigation (IRS CI) are conducting exhaustive investigations focused on uncovering fraud at all stages of the PPP loan lifecycle. These investigations present substantial risks for successful and unsuccessful PPP loan applicants, with serious criminal charges being on the table in many cases.

Potential Consequences of a PPP Loan Fraud Investigation

If federal authorities are targeting you or your business for PPP fraud, it is important to understand what is at stake. Here is an overview of the potential consequences of facing a PPP loan fraud investigation:

1. Denial of PPP Loan Forgiveness

PPP loan recipients that were not eligible to receive a loan may be denied loan forgiveness. Recipients that were eligible for funding but that used their loan proceeds for non-qualifying business expenses (or personal expenses) may be denied forgiveness as well.

2. Prosecution for Bank Fraud, Government Fraud and Other Federal Crimes

Allegations of PPP loan fraud can lead to a host of federal criminal charges. These include, but are not limited to, charges for bank fraud, government fraud, wire fraud, tax evasion, attempt and conspiracy.  All of these are serious federal crimes that carry the potential for substantial fines and long-term federal imprisonment.

3. Criminal Fines

In PPP loan fraud cases, the criminal fines that are at stake depend on the specific charge (or charges) that DOJ prosecutors decide to pursue. For example, under the federal bank fraud statute, both individuals and businesses can face up to a $1 million fine. Government fraud charges can carry fines from $1 million to $5 million. Federal tax evasion charges carry up to a $100,000 fine for individuals and a $500,000 fine for corporations, while attempt and conspiracy charges carry the same fines as the underlying substantive offenses.

4. Federal Imprisonment

Criminal PPP fraud charges can also lead to federal imprisonment. The maximum prison sentences for the charges listed above range from five years for tax evasion to 30 years for bank fraud and wire fraud.

5. Civil Fines and Other Penalties

Even when PPP fraud investigations don’t lead to criminal charges, individuals and businesses targeted in these investigations can still face civil fines and other penalties. Here, too, the specific risks depend on the specific allegations involved. In all cases, however, the risks are substantial, and mitigating these risks requires highly experienced legal representation.

Schedule an Appointment with an IRS Criminal Tax Attorney at Thorn Law Group

If you are under investigation or facing charges for PPP fraud, we strongly encourage you to speak with one of our lawyers as soon as possible. To learn more about the risks involved—and to discuss the defenses you may have available—Call Kevin E. Thorn, Managing Partner of Thorn Law Group at 202-349-4033 or tell us how we can reach you online now.

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