Received a PPP Subpoena? Here’s What You Need to Know About Your Next Steps
One of the primary ways the U.S. Department of Justice (DOJ) and other federal authorities investigate Paycheck Protection Program (PPP) fraud is through the issuance of subpoenas. These subpoenas often require the production of voluminous records, and non-compliance can lead to legal issues regardless of whether the government’s investigation results in charges for PPP fraud.
If you have received a PPP subpoena, you need to respond carefully. You need to make informed and strategic decisions, and you need to avoid making mistakes that could lead to unnecessary scrutiny. With this in mind, here is a brief introduction to what Paycheck Protection Program loan applicants and recipients need to know about responding to a PPP subpoena:
Upon receiving a PPP subpoena, one of the first steps you should take is to review the subpoena carefully. In particular, you want to pay attention to the subpoena’s deadline. Even if you have grounds to challenge the subpoena, you must still plan to meet the deadline should your challenge fail, and a successful challenge won’t necessarily result in the subpoena being quashed in its entirety.
It is also important to discern whether you (or your business) are being subpoenaed as a suspect or witness. While all PPP subpoena recipients must make informed decisions based on strategic legal advice, suspects and witnesses will need to handle their subpoenas differently. At Thorn Law Group, we can help you understand how to approach the government’s subpoena, and we can represent you throughout the process of preparing and submitting an appropriate response.
Defending Against Accusations of PPP Fraud
For individuals and businesses targeted in PPP fraud investigations, avoiding unnecessary consequences requires a strategic and proactive defense. This starts with taking a strategic and proactive approach to the government’s subpoena. Some of the key steps involved include:
Understand the Situation and Be Extremely Careful About the Information You Provide to the Government – When responding to PPP subpoenas, recipients must be extremely careful about the information they provide to the government. If information is protected by the attorney-client privilege or the privilege against self-incrimination, it generally should not be disclosed.
Assess Your (or Your Business’) Risk and Formulate a Defense Strategy – When facing government scrutiny, it is important to promptly assess the risks involved. Based on this assessment, your (or your business’) counsel can then develop and execute a custom-tailored defense strategy.
Identify Mitigation and Focus on Achieving a Resolution that Avoids Federal Criminal Fraud Charges – Generally speaking, the best approach to a federal PPP fraud investigation is one focused on avoiding federal criminal charges. Whether this involves terminating the investigation without liability, keeping the investigation civil in nature, or focusing on settlement depends on the specific circ*mstances at hand.
Discuss Your PPP Subpoena with an IRS Tax Lawyer at Thorn Law Group
If you have received a PPP subpoena, we encourage you to contact us promptly for more information. Call Kevin E. Thorn, Managing Partner of Thorn Law Group at 202-349-4033 orinquire online to schedule an appointment with an IRS tax lawyer at Thorn Law Group.
They are most likely trying to determine your eligibility for the PPP loan. They have been auditing records to ensure people did not lie on applications. Doesn't matter that your PPP was funded and forgiven. If you did fudge some of the numbers on your application, you should consider getting an attorney involved asap.
Bank Fraud: If you lie on your PPP loan application, this is looked at as deceiving a financial institution for profit. You can be charged with bank fraud, under U.S. Code Title 18 U.S.C. 1344. Bank fraud is a white collar crime, and the penalty will vary based on the situation.
Who will be audited? PPP loans in excess of $2 million are automatically triggered for an audit by the SBA. The SBA has created a safe harbor for any PPP loan borrower that, together with its affiliates, received loans of less than $2 million.
The U.S. Small Business Administration (“SBA”) is auditing all companies that received PPP loans of $2 million or greater, while the Department of Justice (“DOJ”) and other federal agencies are ramping up the number of investigations and prosecutions of PPP loan fraud.
Several common issues can arise in PPP loan fraud cases:
You may have a defense if you made an honest mistake or were unaware that you were providing false information. Insufficient evidence: The prosecution must also provide sufficient evidence to support their allegations of fraud.
O'Neil, 58, of Bethel, Connecticut, was sentenced to two years and three months in prison. According to court documents and evidence presented at trial, Chapman, Labrum, and O'Neil fraudulently obtained PPP loans for fictitious businesses in 2020 and 2021.
The federal False Claims Act imposes civil and criminal penalties for fraud targeting federal government programs. The DOJ can pursue civil charges in cases involving unintentional PPP loan application or forgiveness certification fraud, while intentional PPP loan fraud can lead to criminal prosecution.
Possible violations that could trigger a PPP fraud investigation include: Making false statements on your PPP loan application. Using the loan funds for purposes other than those allowed by the PPP guidelines. Falsifying your employee headcount or payroll expenses.
The publicly released PPP data is based on information submitted by the lender to SBA. For concerns about publicly released EIDL data, please email [email protected].
Submitting false information in a PPP loan application and submitting a fraudulent PPP loan forgiveness certification both have the potential to lead to charges under the False Claims Act.
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