Skip to Main Content

What Should You Do If Your Company Is Targeted For Paycheck Protection Program Loan Fraud?

On March 27th, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES Act), was passed by Congress. Among other stimulus measures, the CARES Act included the Paycheck Protection Program (PPP) — $349 billion in funds allocated for forgivable small business loans. For many small employers, the Paycheck Protection Program was a much-needed financial life jacket. However, as the PPP loan program’s regulatory requirements continue to shift and evolve, many business owners have been left confused about their eligibility and the correct way to manage their loan funds. As applications for PPP loans increase, regulators may begin to investigate companies with legitimate claims — especially those that are forced to lay off staff at a later date.

If you are facing an investigation for PPP loan fraud, or have questions about your risk of legal penalties regarding PPP loan fraud, speak to one of our dedicated North Carolina Paycheck Protection Program attorneys today. Snow Legal is committed to fighting for small business owners’ rights, and we have a team of experienced attorneys waiting to answer your questions.

 What Companies Are At Risk For A Federal Investigation?

Due to the considerable amount of federal aid being disbursed, the government has a vested interest in investigating any potential waste, fraud, and abuse. Although the ambiguous guidelines for PPP loan eligibility have perplexed many lenders and borrowers, there is no doubt that federal authorities are vigorously investigating and prosecuting suspected fraud cases.

Any company that knowingly makes false statements in order to obtain government funds can be prosecuted under several federal statutes — and can also face civil and criminal liability. Regardless of your company’s size, if you received PPP funds, you should be aware that you could face the risk of a federal investigation.

In these unprecedented times, it’s crucial to have an experienced federal defense attorney in your corner. The Snow Legal team has more than 20 years of criminal defense practice, and our North Carolina PPP loan fraud attorneys are committed to helping you defend your reputation.

What Should You Do If Your Company Is Targeted For Paycheck Protection Program Loan Fraud?

The statute of limitations for federal criminal crimes is longer than most; therefore, business applicants must maintain a thorough paper trail of their PPP loan application to ensure compliance.

An excellent first step is to hold an immediate review of your initial PPP loan application and eligibility. This will help you to ensure that your certifications were correct and made in good faith. You should also keep a record of all employees and payroll documentation for future reference.

In addition, you should also be able to demonstrate the implementation of controls you adhered to to ensure that all loan funds were spent according to PPP rules. As 70% of the PPP loan must be used toward payroll expenses, your company should also be able to demonstrate the wage (or staff) reductions required in the absence of a PPP loan. The government does not treat federally funded program fraud lightly. If you are unsure about your company’s responsibility in compliance with PPP funds, you should consult an experienced attorney for advice today. Being proactive could save you and your company significant financial penalties in the future.