Georgia Small Business Administration Fraud Attorney

 

 

 

 

 

 

 

 

The economic impact of the COVID-19 pandemic has been disastrous for small businesses throughout Georgia.

To combat the financial harms caused by this global disaster, the federal government created a fund to help small businesses recoup economic losses sustained as a result of the virus.

Administered by the Small Business Administration (SBA), the fund includes several types of assistance. 

However, the eligibility and requirements for obtaining and using these funds can be tricky. Failure to meet all criteria may result in suspicion of fraud. 

If the SBA alleges you or your business engaged in fraud when seeking or applying for COVID-19 economic assistance, a Georgia SBA fraud defense attorney at Griffin Durham Tanner & Clarkson can assist you.

Economic Relief Programs

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES) and the American Rescue Plan Act (ARPA). Each designated trillions of dollars to deal with the economic fallout of the virus. 

CARES and ARPA spurred the creation of several programs that allow small businesses to apply for financial assistance. These programs, administered by the SBA, include the Paycheck Protection Program, the Economic Injury Disaster Loan Program, the Shuttered Venue Operators Grant, and the Restaurant Revitalization Fund. 

Paycheck Protection Program (PPP)

The PPP is a loan program designed to incentivize small businesses to keep employees on the payroll. 

PPP loans may be forgiven. This means they’re not required to be repaid if borrowers meet loan forgiveness requirements. 

Requirements for loan forgiveness include maintaining employee and compensation levels and using the loan proceeds on payroll and related expenses.

Economic Injury Disaster Loan (EIDL) Program 

The EIDL Program is designed to help small businesses and sole proprietors meet financial obligations and expenses that are struggling due to the COVID-19 pandemic. 

EIDLs are expected to be used for the normal operating expenses of a business. Early on, the EIDL Program included loans as well as advances that did not have to be repaid. 

Funding for advances has been exhausted, but businesses are still eligible to obtain loans to help cover operating expenses.

Shuttered Venue Operators Grant (SVOG)

The SVOG is a program with over $16 billion dedicated to assisting live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, movie theater operators, and talent representatives. 

Businesses or nonprofits are eligible for grants of the lesser of 45% of their gross earned revenue or 10 million dollars. These grants do not have to be repaid.

Restaurant Revitalization Fund (RRF)

The RRF is a fund established to help restaurants and bars keep their doors open. The RRF provides restaurants with funding equal to their pandemic-related revenue losses, up to $10 million per business. 

Restaurants and bars are not required to repay the funding as long as the funds are used for eligible expenses before March 11, 2023. 

Allegations of Small Business Administration Fraud

The eligibility requirements and use of funds for the COVID-19 economic relief packages are very specific. If the SBA believes or is informed that a business was not eligible for aid or made improper use of aid, the administration will refer the matter to the Department of Justice (DOJ). 

As announced in May 2021, the DOJ has already started widespread crackdowns on conduct it believes to be fraud. It has the authority to bring federal criminal charges against those who allegedly obtained funds from the SBA through fraud or misrepresentation or improperly utilized SBA funds. 

The Department of Justice hopes to make examples of people or businesses that improperly applied for and used economic relief funds to discourage such practices. To date, the DOJ has charged over 120 defendants with fraud related to PPP loans and continues to focus on fraud related to other SBA funding under CARES and ARPA. 

Consequences of being found guilty of such fraud include jail time, fines, and restitution of improperly obtained funds.

Possible Charges for SBA Fraud

SBA fraud is taken very seriously by the federal government and its agencies. There are a number of federal criminal statutes that apply to acts involving SBA fraud. 

The specific crime that you’re charged with depends upon the suspected criminal conduct and the organizations that are involved. 

When one person is involved in a crime, they can be charged with that particular crime. However, when one or more individuals are involved, a conspiracy charge could also be added.

When a party is thought to have engaged in fraudulent acts related to the SBA and SBA-backed loan applications, prosecutors can pursue criminal penalties for:

  • False statements to the SBA
  • False statements to a federal agency
  • Bank fraud
  • False statements in a loan application

These are the direct charges available, although the circumstances of the violation may expose the suspected party to additional charges. 

It’s important to connect with a Georgia SBA fraud defense attorney as soon as you have become aware of present or pending charges. The prosecutor’s office is generally overburdened with cases, and informed legal advocacy on your side can lead to the best possible outcome in your case.

Aggravated Identity Theft

Aggravated identity theft is the use of the information of another party to engage in fraudulent financial transactions for the benefit of the guilty party. 

Aggravated identity theft can occur within the context of loan applications, with each instance carrying a minimum sentence of two years, as reported by the US Department of Justice

The government is targeting parties that engage in financial fraud with strong measures in an effort at curbing the behavior. Related charges can lead to substantial penalties and fines.

Bank Fraud

Bank fraud involves a plan or scheme that is used to knowingly defraud a bank or to obtain any money or fund controlled by the bank under false pretenses, promises, or representations. 

Bank fraud includes a variety of activities, from forging bank checks to providing false information on mortgage or loan applications. A conviction could lead to fines up to $1,000,000, and up to 30 years in jail.

Conspiracy

In federal terms, the charge of conspiracy is generally referred to as conspiracy to commit fraud. This is a separate and distinct crime from the actual crime of fraud itself. Basic charges of fraud include mail fraud, wire fraud, and healthcare fraud, and are concerned with a single act of defrauding a party. 

Conspiracy is concerned with the intention or agreement of two or more people or organizations to engage in fraudulent activity.

When two or more persons or parties are engaged in fraud together, they may face charges not only for fraud but also for conspiracy. When convicted of conspiracy, you could face fines and time in prison that are similar to, or on top of, any penalties you might also face for fraud. 

To be convicted of conspiracy, the prosecutor must prove that you intended to commit the crime and that you were co-conspiring with at least one other person to commit the crime.

Making False Statements to a Federal Agency

It’s illegal to make a false, material statement meant to deceive or mislead a matter that is under the jurisdiction of the federal government or a federal agency. 

Material statements are statements that would tend to influence the decision-making process under issue, like a loan application. Being convicted for making false statements to a federal agency can lead to incarceration for up to five years and a fine of up to $250,000.

Making False Statements to the SBA

When an individual makes a knowingly false statement to the SBA, overvalues security or collateral to obtain an SBA loan, or otherwise attempts to influence the SBA, it’s a felony. This could expose you to the potential of two years in jail and/or a fine of up to $5,000. 

The statements must not only be false but also have been made when you had knowledge that they were false. This requires that the prosecution prove your knowledge and the falsity of the statements. Your informed attorney will help to ensure that the evidence indicates otherwise.

Loan Application Fraud

During the COVID-19 pandemic, many businesses were found to have engaged in COVID-19-related loan application fraud. 

The Office of the Inspector General (OIG), in addition to other federal agencies including the FBI, is actively engaging in related investigations and prosecutions. 

SBA loan scams have impacted a great many Americans, whether in the form of COVID-19 loan applications or stimulus check fraud. Federal authorities are making a concentrated effort to end these practices.

Tax Evasion

Tax evasion is a type of fraud that involves a person or corporation failing to report taxable income in an attempt to avoid tax liability. 

The IRS aggressively targets tax evasion charges and punishments can include a wide range of fines and terms of imprisonment.

Wire or Mail Fraud

The United States government defines fraud as an act of deliberate deception that is engaged in for unlawful gain, and wire or mail fraud are some of the most common forms. 

Wire fraud is a term used to describe any interstate electronics communications used in an attempt to defraud another of property, while mail fraud is the same only using the interstate mail system. 

No actual transaction needs to be completed for you to be accused of wire or mail fraud. The government only needs to demonstrate that you intended to defraud, embarked on a scheme to defraud, and used either mail or electronic communication in the attempt.

Risk of Criminal Prosecution is High

The risk of criminal prosecution for SBA fraud is especially high due to the increasing attention the government is paying to “white-collar crime.”

In the past, more traditional forms of crime were the focus of governmental investigations, but the size and scope of financial fraud in the United States has become a national issue. From financial scams and identity theft to COVID-19 loan fraud, the government is aggressively prosecuting all forms of SBA fraud in an attempt at collecting money and minimizing such behaviors in the future.

How to Avoid Criminal Investigation

The best way to avoid being investigated for fraud related to Small Business Administration funding is to apply for funding in good faith. 

You must keep detailed records related to funding applications to support the factual assertions made in the application. 

You also must use the funds consistent with the program requirements. That way, should there be any question as to whether expenses were covered under CARES or ARPA, you can substantiate your use of any funds.

If You Are Accused of SBA Funding Fraud, Contact Us Now 

If you’re accused of defrauding the SBA in relation to COVID-19 relief funds, it’s imperative that you speak to a Georgia SBA fraud defense attorney with experience in federal cases and white-collar criminal defense. 

At Griffin Durham Tanner & Clarkson, we have years of experience prosecuting and investigating these cases and experience representing criminal defendants. To schedule your first meeting, call (404) 891-9150 in Atlanta, and (912) 867-9140 in Savannah.