Introduction

The PPP loan program has been launched to help small businesses affected by the coronavirus pandemic. PPP loan recipients were required to use the money for pre-approved expenses such as rent, payroll, and utilities.

Although the loan program has been top-rated, some companies have been accused of abusing PPP financing: credit fraud. Some loan recipients may have lied on their loan applications to qualify.

Businesses that have received PPP loans sometimes use the money for something other than intended. For example, some companies might have used their PPP loan money to buy inventory they could resell at a profit.

Fraudulent PPP Loan Penalties

Fraudulent PPP Loan Penalties

Fraudulent PPP loans are severely penalized. A person who falsifies information in a loan application to obtain a PPP loan may be fine up to $250,000, imprison for up to five years, or both. Some person may be subject to United States civil liability in the form of a civil action for damage or loss caused by the person’s fraudulent conduct if convicted of a crime related to the PPP credit Program.

A person obtaining a PPP loan through fraud may be subject to repayment of the total loan amount plus interest, in addition to possible criminal and civil penalties.

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What Happens when a PPP Loan is Flagged is the Question?

The government sends requests for information to many people. What to do when you receive a PPP loan information request or subpoena is the question that banks and borrowers ask.

Once a PPP loan is identified, you should contact our PPP loan fraud attorneys. It is essential to take the responsibility of responding to the summons or request thoughtfully. To help you navigate this procedure, you should consult a consultant.

It would benefit if you did not take any action before speaking with the attorney, as this may present new evidence that could be used against you. Develop a plan for how you will approach the government with legal representation.

All loans over $2 million are currently under review. It can be a concern if you have taken out a loan of less than $2 million and have been expose. One of your employees may be a whistleblower and take legal action against you to help the government detect fraud and theft. These cases are called qui-tam cases. Federal and employment regulations are very strict about how you must handle these situations. Checking the government and taking action against the employee is prohibited.

What Causes PPP Loans to be Flagged?

The SBA may raise a red flag for a PPP loan for various reasons. Here are some positions that could trigger a red flag when applying for a loan.

  • The Company has submitted multiple PPP loan applications to various lenders.
  • The company submitted a fraudulent credit request for a PPP.
  • They submitted a PPP credit request that was incomplete.
  • Unauthorized spending can made with the PPP loan.
  • Made a fraudulent certification to be qualified for PPP credit forgiveness.

Detectives and federal prosecutors investigate PPP loan fraud and other CARES Act crimes.

How is a PPP Loan Handle After it is Flagged?

If your PPP credit is reported, you will receive an order or other type of civil investigation request. The progress of the investigation may change depending on the competent authority. The bottom line is that you need to hire a PPP credit fraud advocate who can provide support and guidance.

Federal agencies could charge you with various crimes, including bank fraud, wire fraud, conspiracy to commit fraud, misrepresentation of a financial institution, etc.

You should assume that he will also investigated for PPP credit fraud if his PPP credit is exposed. It marks the beginning of the PPP credit fraud investigation, and also you should speak with a PPP credit fraud lawyer who can help you.

When do you learn that the PPP Loan has been Flagged?

  • You must keep all your personal and professional records and not destroy anything.
  • You should contact our lawyers as soon as possible for assistance and instructions.

PPP Prison Time

If a PPP borrower took out a credit based on fraudulent information, they might serve up to five years in custodial and pay up to $250,000 in fines. The maximum penalty under the Paycheck Protection Program Flexibility Act was 30 years in prison.

Fraudulent PPP Loan Forgiveness

The beneficiary of a loan cancel under the Paycheck Protection Program must document how the loan proceeds were use and how many employees were employ during the covered period. False information provided to the SBA when applying for debt relief can result in a prison verdict of up to five years and a fine of up to $250,000. The maximum penalty under the Paycheck Protection Program Flexibility Act was 30 years in prison.

Conclusion

This Scheme was create to provide low-interest loans to small businesses affect by the coronavirus pandemic. Companies receiving a PPP credit had to spend it on approved expenses such as payroll, rent, and utilities.

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