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PPP Loan Fraud: Examples, Forgiveness, Investigations, And Consequences

PPP Loan Fraud Examples Forgiveness, Investigations, and ConsequencesIn this article, you can discover:

  • Examples of ineligible business expenses that may be considered PPP loan fraud.
  • Requirements for PPP loan forgiveness.
  • Examples of fraudulent loan forgiveness certifications.
  • Potential consequences of committing PPP loan fraud.

What Are Examples Of Using PPP Loan Funds For Ineligible Business Purposes?

Business expenses such as rent, internet, paper products, and supplies are necessary to keep the operation running. However, certain expenses may fall into a gray area, similar to taking tax deductions for business expenses.

For instance, purchasing a new laptop computer to use at the business that is also used recreationally at home may be a close call. Federal investigators are not interested in these gray areas but rather in more obvious misuses, such as purchasing luxury items or going on vacation with the loan money.

What Were Or Are Reasons PPP Loans Were Offered Forgiveness?

PPP loans were attractive to businesses because they functioned as a grant or free money with certain requirements to meet for loan forgiveness. To have the loans forgiven, all employees had to keep their jobs, 60% of the loan had to go to payroll expenses, and the other 40% had to be used for appropriate business expenses. As a result, over 90% of all PPP loans were forgiven.  Because PPP Loans were essentially a free money grant from the government, they were also very susceptible to fraud.

What Are Some Examples Of Fraudulent Loan Forgiveness Certifications?

Forgiveness certifications were a promise by applicants that they spent the money as required, and they had to swear and affirm that they did. If it were discovered that the loan money was not spent appropriately, the certification would be considered fraudulent or false.  Filing a fraudulent loan forgiveness certificate is a crime under federal law.

How Will I Know If Or When I Or My Company Are Being Investigated For PPP Loan Fraud?

It is unlikely that individuals or companies will know they are being investigated until it is too late because federal law enforcement generally makes contact after wrapping up their investigation. Individuals may be contacted to discuss the investigation, or a subpoena for books, accounting documents, or other business documents may be served. If contacted by a federal agency regarding PPP loan fraud, it is essential to hire an attorney.  It is rare to be contacted by federal law enforcement without charges being filed soon thereafter.

Is PPP Loan Fraud A Federal Criminal Offense?

PPP loan fraud is a federal criminal offense because the PPP loan program was a federal program through the Small Business Administration (SBA).

Federal law enforcement carries out almost all prosecutions for the various types PPP loan fraud. Different charges that may arise from a PPP loan fraud investigation include bank fraud, loan fraud, wire fraud, mail fraud, making false statements to the SBA, false statements made to a federally insured bank, or money laundering.

My Company Is Being Investigated For PPP Loan Fraud. What Should We Do?

If a company is being investigated for PPP loan fraud, it should immediately hire an attorney to protect itself. You need a firm with extensive experience defending white-collar crimes and financial crimes. The MacNeil Firm has a certified public accountant (CPA) on staff, as well as attorneys with strong background in accounting and financial institutions to provide our PPP fraud and white collar clients with the best opportunity for success.

Is PPP Fraud Considered A White Collar Crime?

PPP loan fraud is considered a white-collar crime because it is a non-violent financial crime. White-collar crime encompasses any fraud, embezzlement, deceptive practice, money laundering, or any other crime involving complex financial fraud.

For more information on PPP Loan For Ineligible Business Purposes, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (708) 218-0947 today.

Donald N. Macneil, Esq.

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