The past two years have been tough for small businesses. To help keep employees on the payroll, the government instituted the Paycheck Protection Program (PPP). Businesses could apply for up to $10 million in federally guaranteed loans, and many people kept their jobs because of the program.
However, not everyone who applied for PPP loans did so legitimately. According to NBC News, about ten percent of the PPP money handed out was fraudulent.
How fraud occurs
Though there are limits to how businesses could spend the money, the application process was very forgiving. PPP fraud occurred when businesses applied to multiple lenders at once, used the money for unauthorized purposes, used false statements to obtain the loan or misled an auditor or investigator.
How to handle an investigation
When under investigation, there is nothing you can say that will help your case. Trying to clear your name or tell the truth only incriminates yourself. If Small Business Administration auditors show up at your business, do not give them any statements. Your fifth amendment rights are the most important protection you have in this situation. The SBA agents might ask you questions, but you have the right not to incriminate yourself.
Criminal charges for PPP fraud
Charges for PPP loan fraud might include:
- Conspiracy to commit fraud if more than one person works to obtain the loan fraudulently
- Wire fraud if you use a device to secure a fraudulent loan
- Bank fraud if you lie on the application
- False statements to a financial institution if any of the above apply
Committing fraud on a PPP loan application is a federal crime. Willingly or not, if under investigation, do not incriminate yourself and maintain your fifth amendment right until you get professional help.