Georgia PPP Fraud Attorney - Paycheck Protection Fraud

The white collar criminal defense attorneys of Georgia-based Griffin Durham Tanner & Clarkson LLC represent individuals and businesses accused of defrauding the federal government. If you received a Covid-19 relief loan through the Paycheck Protection Program (PPP) or Small Business Administration (SBA) and are facing PPP fraud or similar allegations, our dedicated team can help.

The Basics of the Paycheck Protection Program

Over the course of the Covid-19 pandemic, the federal government enacted programs to help businesses stay afloat. More specifically, PPP loans were designed to help employers maintain payroll, hire employees who had been laid off, and cover certain types of overhead expenses.

The PPP provided up to eight weeks of payroll costs, including benefits, and paid for other expenses such as:

  • Mortgage interest
  • Rent
  • Utilities
  • Covid-19-related worker protection costs
  • Uninsured property damage costs related to looting or vandalism during 2020
  • Certain supplier and operations expenses

Eligible companies included the following:

  • Sole proprietors, independent contractors, and self-employed individuals
  • Small businesses that met certain SBA size standards
  • Any business, nonprofit organization, veterans organization, or tribal business with greater than 500 employees, or that meets the SBA industry size standard if more than 500 employees
  • Certain businesses in the accommodations and food service industries

The program ended on May 31, 2021; however, in certain circumstances, these loans can be forgiven.

What Are The Requirements For Loan Forgiveness?

A borrower can apply for loan forgiveness once all PPP funds have been exhausted. Borrowers are allowed to apply up to the maturity date of the loan. To apply, the following criteria must be met:

  • Employee and compensation levels are being maintained;
  • Funds were spent on eligible expenses; and
  • At least 60% of the funds were spent on payroll.

Certain paperwork must be filled out and documentation provided. The SBA maintains forms and detailed instructions concerning loan forgiveness on its website.

Why Are Some Georgia Borrowers Being Investigated For Paycheck Protection Program Fraud?

In an effort to prevent fraud, the government established strict eligibility requirements and restrictions on how PPP money could be used. Failure to follow these rules, even unintentionally, can result in someone being the target of a Department of Justice (DOJ) criminal investigation.

Over the past year, the DOJ has aggressively pursued PPP fraud charges against more than 100 defendants in 70+ criminal cases. Investigators have recovered $65 million in cash as well as property and luxury items purchased illegally. Charges filed cover an array of conduct, such as:

  •  Inflating payroll expenses to obtain larger loans than business owners qualified for;
  • Reviving dormant corporations and purchasing shell companies with no real operations to apply for multiple loans;
  • Submitting identical loan applications and supporting documents under the names of different companies;
  • Spending loan proceeds on prohibited items such as houses, cars, jewelry, and other luxuries;
  • Using stolen and fictitious identities and sham companies to secure loans;
  • Money laundering through a web of bank accounts to make improper purchases; and
  • Bank, wire, or mail fraud.

Because the loan forgiveness process is ongoing, it is expected that DOJ action will also focus on borrowers who fraudulently request forgiveness by falsely certifying that they complied with the criteria listed above. Therefore, a defendant could have legitimately applied for and used PPP funds, yet failed the requirements for forgiveness and applied for it anyway. That is where the DOJ action could be directed for that particular circumstance.

If convicted of paycheck protection program fraud, a defendant could face significant jail time, heavy fines, and restitution for funds improperly obtained or spent.

Accused of PPP fraud? Take These Steps to Protect Your Business

If you are accused of PPP fraud, there are still things you can do. By being proactive and gathering the relevant documents and evidence of how you used your PPP loan, you can be prepared to fight the accusations. There are several steps you can take to help protect your business. Do these things as soon as you learn your business is being accused of PPP fraud.

1. Gather all your business and personal financial records.

The first thing you can do is find and collect all documents pertaining to both your business and your personal finances. This will be a lot of documents, so know that it may take some time. Relevant records may include, but are not limited to, the legal documentation of you forming your business, documentation of the legitimacy of your business, payroll records, business and personal tax documents, profit reports, and end-of-year reports. Any records that show what your business does, how it operates, and how you spend your personal finances can be helpful to have nearby. Be sure to label the records when you compile them and have both hard copies and digital copies of everything.

2. Gather all documents related to your PPP application, including supporting records.

You should also gather every single piece of documentation related to your PPP application. This could include a copy of the submitted application, any mail or email correspondence with the government regarding your PPP application, any supporting documents or demonstrated proof of why your business needed a PPP loan, and any documents or company-wide memos that reference the PPP loan and its impact on your business.

Make sure that your need for the PPP loan is well-documented and it is clear why and how the loan was used to keep your business afloat during the pandemic. These documents should also be labeled and available in both hard copy and digital format.

3. Document how the money was spent.

One of the most important steps is to have clear and thorough documentation of exactly how the PPP loan was spent. Every version of your budget, every financial spreadsheet, all payroll documents, offer letters, bank statements, copies of checks, and all financial ledgers will be needed. You’ll need to show exactly how and when every dollar of the PPP loan was spent in order to prove that the loan was not used fraudulently.

Compiling all of this financial documentation can feel daunting, especially with the looming threat of a fraud accusation, but every piece of evidence you can provide will go a long way toward refuting these accusations. If your business used the PPP loan legally and correctly according to the guidelines, then you are not guilty of fraud; you just need to compile every piece of evidence available to show that you spent the loan money in allowable ways.

4. Review the loan forgiveness requirements and ensure you complied with them.

Next, go back over the criteria for PPP loan forgiveness. Check each requirement one by one, and make sure that you met each one. Gather and attach proof of compliance with each of the requirements. If you did not meet all of the requirements for PPP loan forgiveness or you cannot prove that you met all of the requirements, but you applied anyway, the DOJ can make a case against you for attempting to defraud the government by applying for loan forgiveness that you did not actually qualify for. 

5. Be transparent with your employees.

It is important that you are open and honest with your employees about the fraud accusations, so they are aware of what is going on in the company. Talk with your employees about how they can discuss any suspicion of fraud within the company with management without fear of retaliation. Make sure that this policy is documented in writing and signed by employees so that you are sure they understand.

Otherwise, if an employee suspects fraud but is afraid of speaking to management about it out of fear of losing their job or being penalized at work, they could withhold valuable information about fraudulent activity in the company. If this happens, they may file a whistleblower lawsuit instead, which would be tremendously expensive and cause more complications for you in the long run. It’s better to have a clear policy in place that encourages employees to report fraud without fearing retaliation. 

6. Hire a skilled white-collar criminal defense attorney.

The smartest step you can take to protect yourself and your business when you are accused of PPP fraud is to hire an experienced white-collar criminal defense attorney. You can gather as much documentation as possible first, but nothing will prepare you to defend yourself to the DOJ as much as hiring a PPP fraud defense attorney based right here in Georgia. Fraud accusations are serious; be represented by an attorney from a firm known for success in white-collar criminal defense. 

Don’t Speak with DOJ or SBA Agents Before Hiring an Attorney

It’s crucial that you refrain from speaking with any agents from the DOJ or SBA about any fraud accusations until after you have hired an attorney and spoken with them first. Just like you know your business better than anyone, no one knows the law better than an attorney. If you speak to a DOJ or SBA agent before speaking to a lawyer, you could unintentionally incriminate yourself by saying something out of context.

It is best to hire an attorney who will carefully evaluate the accusations and evidence first before speaking to any government agents. Your attorney will help you understand what the government is accusing you of and why. Without this important understanding, you could answer a question or share a piece of information that makes you seem guilty of fraud when you are not.

Once you hire a white-collar criminal defense attorney, they will guide you in terms of the next steps to take and how to communicate with the DOJ or SBA agents. If the agents trying to speak with you are acting pushy, know that it is your right to say you are waiting to speak with them until you have an attorney.

A Georgia PPP Fraud Defense Attorney Can Help

Federal criminal investigations are perilous, and they demand the experienced legal representation our law firm provides. We will carefully investigate the charges against you, identify supporting documentation related to your application and expenditures, and advise you of your legal rights.

If you’ve been accused of Payment Protection Program or SBA loan fraud, call our Georgia white collar crimes defense attorneys today. Give us a call to schedule your confidential consultation. Call (404) 891-9150 for our Atlanta office or (912) 867-9140 for our Savannah office.