What To Know About Paycheck Protection Program Fraud In Texas
When COVID-19 restrictions locked down businesses in Texas and worldwide, the Federal Government acted by establishing the Paycheck Protection Program and other measures to protect business owners. The Paycheck Protection Program (PPP) was a loan program established within the Coronavirus Aid, Relief and Economic Security Act (CARES) Act in March 2020. To help small businesses stay afloat, the CARES Act authorized billions of dollars in forgivable loans via the Paycheck Protection Program and other sources.
PPP loans designed to assist businesses, non-profit organizations, self-employed workers and independent contractors pay wages and keep people employed through the worst of the Covid-19 pandemic. Qualifying businesses could apply for up to $10 million in PPP loans during the pandemic, with these loans intended to make up for revenue losses due to lockdowns and other Covid restrictions.
For businesses that maintained employee counts and kept wages stable during the pandemic, they could apply for forgiveness of the loan. If the loan was used as intended and the business maintained certain payroll and staffing levels, high-balance Federal loans could be entirely forgiven.
The Rise of PPP Fraud in 2020 and 2021
While well-intentioned and critical for thousands of business owners, the Paycheck Protection Program opened the door for fraud and misuse of Federal funds. Not long after PPP loans started being issued, stories made the news of fraudsters filing falsified applications for PPP funding, using PPP loan money to buy fancy cars, jewelry, boats, and designer clothes.
Paycheck Protection Program fraud was perhaps an unavoidable outcome due to the unique, emergency nature of the program itself. Funds had to be distributed quickly to aid business and protect the economy. Due to the high volume of PPP applicants, some fraudulent applications were bound to slip through the cracks. In many cases, individuals or groups created fictitious businesses, or lied about their staff levels, assets, and other resources to obtain funding.
Since 2021, the Federal Government has investigated thousands of alleged PPP fraud situations. Arrests and charges related to PPP fraud can lead to serious criminal charges, including:
- Bank fraud
- Wire fraud
- Making false statements to a federal agency
- Making false statements to a financial institution
All of these crimes, and some others, can be charged as felonies. If convicted, an alleged fraudster can face years in prison, heavy fines, and restitution costs for the amount of money taken. Collateral consequences can include lifelong career and reputational harm – including the inability to take out loans later on.
As Federal agencies cast a wide net to locate those who misused PPP funds, many well-meaning business owners can find themselves under investigation. A loan application containing errors or discrepancies, for example, could lead to investigation, audits, and legal headaches for businesses that applied for PPP loans simply to stay afloat.
If You Are Being Investigated for Fraud Related to a PPP Loan, Contact Our Pearland, Texas Criminal Defense Attorney Today
Those investigated or accused of fraud under the Payroll Protection Program and CARES Act should contact an experienced criminal defense attorney as soon as possible. The stakes are simply too high for those that believe they are accused of something they did not do. At Keith B. French Law, our Pearland criminal lawyers will analyze any evidence the prosecution is attempting to use against you and discuss all available defenses and legal strategies. To learn more about your legal rights in PPP fraud claims, contact the offices of Keith B. French Law, PLLC online or call 832-243-6153 today.