Can You Get Charged with Obstruction for PPP Investigations?

The Paycheck Protection Program (PPP) was created in 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide forgivable loans to small businesses impacted by the COVID-19 pandemic. However, with billions of dollars being distributed rapidly, allegations of fraud and abuse soon emerged. This prompted federal agencies like the Department of Justice (DOJ) to launch investigations into potential PPP loan fraud cases. So what happens if you find yourself the target of a PPP fraud investigation? Could you be charged with obstruction? Here's what you need to know.

Overview of PPP Loan Fraud Investigations

What triggers PPP loan investigation?

There are two main federal agencies leading PPP fraud investigations:

The Small Business Administration Office of Inspector General (SBA OIG)
The Department of Justice (DOJ)

These agencies are looking into cases where individuals or businesses may have intentionally provided false or misleading information to obtain PPP loans or misused loan funds for unauthorized purposes. Potential violations being investigated include:

Using stolen or fake identities to apply for multiple fraudulent loans, also known as "loan stacking"
Overstating payroll expenses to receive larger loan amounts
Using funds for personal purchases instead of approved business expenses like payroll and utilities

Type of Violation	Potential Criminal Charges
Loan stacking	Wire fraud, bank fraud, identity theft
Payroll fraud	False statements, wire fraud, bank fraud
Misuse of funds	Wire fraud, bank fraud, money laundering

If criminal charges are filed, penalties can include hefty fines and years in prison depending on the amounts involved and the specific charges.

Obstruction Risks During Investigations

Obstruction charges may come into play if you take certain actions during the investigation process. Obstruction essentially means interfering with an ongoing investigation, which is itself a federal crime. Types of conduct that could warrant obstruction charges include:

Destroying or concealing records requested by investigators
Lying or providing false statements to investigators
Persuading others to destroy evidence or not cooperate

Even if you are never formally accused of PPP loan fraud, obstruction can bring a conviction carrying up to 20 years in prison. So it is critical not to interfere with an investigation in any way.

Responding to PPP Investigators

How do you know if your PPP loan is being investigated?

If federal agents come knocking about your PPP loan, stay calm and be cautious in your responses. Keep these dos and don'ts in mind:

DO:

Politely ask for the agent's identification and credentials
State you wish to cooperate but will not answer questions without your lawyer present
Contact a defense lawyer immediately

DON'T:

Let investigators search your home or business without a warrant
Destroy or alter any documents related to your PPP loan
Lie or mislead investigators about any information
Try to persuade anyone else involved to conceal evidence or obstruct the investigation

A skilled white collar defense attorney can properly handle interactions with investigators and help prevent obstruction issues from arising.

Building an Obstruction Defense Strategy

If you do face obstruction charges related to a PPP fraud investigation, an experienced federal defense lawyer can start building a defense strategy focused on defeating those charges. Possible defenses include:

No corrupt intent - Arguing you did not realize your actions would impede the investigation
No pending proceeding - No official investigation had begun when the alleged obstruction occurred
No material impact - Your actions did not actually hinder the investigation in any meaningful way

An attorney can also negotiate with prosecutors for reduced charges or penalties, particularly if you choose to cooperate fully from that point forward.

Getting Legal Help for PPP Investigations

Dealing with PPP fraud accusations and obstruction charges can be extremely unnerving. But the skilled federal criminal defense lawyers can guide you through the process and build the strongest defense for your unique situation. We have extensive experience representing business owners and individuals facing PPP fraud and obstruction of justice allegations across the country. Contact us today for a free case review and legal consultation.