Navigating PPP and EIDL Fraud Charges in Massachusetts

When COVID-19 hit in early 2020, it caused huge revenue losses for many small businesses overnight. To help companies survive, the government created emergency relief programs like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. But these hastily rolled out programs were full of fraud, and now business owners in Massachusetts are facing criminal charges.

Let’s break down what happened with PPP, EIDL and fraud charges in more detail:

What are PPP and EIDL?

PPP loans were created by the CARES Act in March 2020 to help small businesses keep paying employees during COVID-19 shutdowns. These low-interest private loans backed by the Small Business Administration (SBA) could be forgiven if used on eligible expenses like payroll, rent and utilities. A second round of PPP funding opened in April 2021.

The EIDL program predated COVID-19 but was expanded to give low-interest SBA disaster loans up to $2 million to businesses hurt by the pandemic. Applicants could also get EIDL grants up to $10,000 that didn’t need to be repaid.

In total, the SBA approved over 11 million PPP loans worth nearly $800 billion and over 3.7 million EIDL loans worth $192 billion.

How Much Fraud Occurred?

With so much money flowing so fast, fraud was rampant. The SBA Inspector General estimates at least $80 billion in potentially fraudulent PPP funds, including:

• Multiple loans approved for the same borrower
• Loans approved for fake or ineligible businesses
• Borrowers exaggerating payroll to get bigger loans

What Are Common Federal Fraud Charges?

The Justice Department is aggressively prosecuting PPP and EIDL fraud. Some federal charges include:

Bank Fraud

Lying on PPP applications can lead to bank fraud charges since private lenders issue the loans. This carries up to 30 years imprisonment and a $1 million fine.

Wire Fraud

Because PPP funds are electronically transferred, wire fraud charges may apply. This can mean up to 20 years in prison.

False Statements

Lying on SBA loan applications violates 18 U.S.C. § 1001 and carries up to 5 years imprisonment.

Aggravated Identity Theft

Stealing someone’s identity for COVID relief funds leads to mandatory 2-year prison time.

There are also civil penalties like treble damages, clawbacks of funds, and debarment from federal contracts.

Massachusetts PPP and EIDL Fraud Cases

Some examples of prosecutions in Massachusetts include:

• A Boston used car dealer allegedly falsified documents for $85,000 in PPP loans and $15,000 in EIDL grants.
• Two men were charged with submitting 18 fraudulent applications worth over $690,000 under fake businesses and stolen IDs.
• A restaurant owner was indicted for claiming over $660,000 in PPP loans for non-existent employees.

Getting Experienced Legal Help

Even innocent mistakes could lead to prosecution. Anyone being investigated for PPP or EIDL fraud should immediately contact an experienced defense attorney. A lawyer can evaluate if you have viable defenses, negotiate with prosecutors, and defend you if charges are filed.

The government is taking COVID relief fraud seriously and handing out stiff sentences. These complex cases require an attorney well-versed in federal white collar criminal defense to protect your rights and freedom.