Federal PPP & EIDL Fraud Defense

Why PPP and EIDL Prosecutions Are Still Active

The Paycheck Protection Program and the Economic Injury Disaster Loan program disbursed roughly $1.2 trillion in pandemic-era relief between 2020 and 2021. By the time the programs closed, the Department of Justice had already created the COVID-19 Fraud Enforcement Task Force, and Congress had extended the statute of limitations for PPP and EIDL fraud to ten years. That extended clock is the reason indictments are still landing in 2026, and the reason they will keep landing through 2030 and 2031.

The Pandemic Analytics Center of Excellence (PACE) is the engine behind the second-wave cases. PACE cross-references IRS payroll data, bank deposits, SBA loan files, and corporate filings to flag inconsistencies. A loan application that claimed 12 employees but matches an EIN with three W-2s. An EIDL borrower who certified a sole proprietorship that has no Schedule C filed. A PPP loan whose proceeds were transferred immediately to a personal account. These are the patterns PACE finds, and they are the patterns prosecutors charge.

If you received a PPP or EIDL loan in 2020 or 2021 and have now received an SBA OIG subpoena, a grand jury target letter, or a contact from the FBI, the case has been in development for months. The government rarely opens a PPP or EIDL file without a documentary core already assembled.

The Statutes Federal Prosecutors Are Using

Bank Fraud, 18 U.S.C. § 1344. PPP loans were issued by federally insured financial institutions. False statements to obtain those loans, or to obtain forgiveness, are charged as bank fraud, carrying up to thirty years per count. Bank fraud is the lead count in most PPP indictments.

False Statements to a Financial Institution, 18 U.S.C. § 1014. Each PPP certification, the employee count, the payroll figure, the use-of-proceeds promise, the affiliate disclosure, is a potential § 1014 count. § 1014 also carries up to thirty years per count and is the prosecutor's tool for stacking exposure in cases where the loan itself was relatively small.

Wire Fraud, 18 U.S.C. § 1343. The application submission, the lender's wire transfer of proceeds, and the subsequent disbursements all touch interstate wires. Wire fraud counts get added to multiply exposure and to extend jurisdiction.

False Statements to a Federal Agency, 18 U.S.C. § 1001. EIDL loans came directly from the SBA, which makes § 1001 the primary false statement charge for EIDL fraud rather than § 1014. § 1001 carries five years per count and is frequently paired with wire fraud and conspiracy.

Conspiracy, 18 U.S.C. § 371. Conspiracy charges allow prosecutors to indict loan agents, accountants, fulfillment partners, and family members alongside the principal borrower whenever the application or use of proceeds involved coordination.

Money Laundering, 18 U.S.C. §§ 1956, 1957. Once fraud predicates are established, every subsequent transfer of the loan proceeds becomes a money laundering count. This is how a single PPP loan can generate a fifteen-count indictment.

How These Cases Are Built

The pattern is consistent across districts. SBA OIG opens a file based on a PACE referral or a whistleblower complaint. OIG issues a subpoena for the loan file, the bank records, and the supporting documentation. The U.S. Attorney's Office reviews the OIG package and decides whether to bring criminal charges or refer civilly under the False Claims Act. In SDFL, the Middle District, and increasingly the Eastern and Northern Districts of Florida, the criminal track is the default.

Documents drive everything. PPP and EIDL fraud is a paper case. The application, the certifications, the supporting payroll records, the bank statements, the use-of-proceeds ledger, the forgiveness submission, all of these are in the government's hands before a target letter is issued. Defense work that begins after indictment is defense work that begins with the prosecution already holding the documentary record.

Our Defense Approach

AMC Defense Law has handled PPP, EIDL, and broader COVID-era fraud cases in South Florida and federal courts nationwide. The defense strategy adapts to the stage of the case.

Pre-indictment representation. SBA OIG subpoenas and grand jury target letters are the highest-leverage points for defense intervention. The right response can narrow scope, control document production, and in some cases convert a criminal case into a civil False Claims Act resolution.

Loss calculation defense. The Guidelines drive sentencing in PPP and EIDL cases, and the loss number drives the Guidelines. We contest loss calculations forensically: legitimate eligibility for portions of the loan, legitimate use of portions of the proceeds, credit for funds returned, and proper application of the offset rules. A $400,000 loss reduction can mean two years off a sentence.

Reliance defenses. Many PPP and EIDL borrowers worked with loan agents, accountants, or fintech lenders who actively built the application. We develop reliance evidence in detail, who gave what advice, what documents were provided, what the borrower understood, because it is often the difference between a felony conviction and a misdemeanor or declination.

Eligibility and intent defenses. PPP eligibility rules changed multiple times between PPP1, PPP2, and SBA interim guidance. EIDL eligibility was even more ambiguous for sole proprietors and gig workers. Where the borrower's understanding of eligibility was reasonable at the time, that is a defense to the intent element, and we build it on the record rather than at trial.

If you or your loved ones have been contacted by SBA OIG, the FBI, or a federal grand jury regarding a PPP, EIDL, or other COVID relief loan, call Aaron M. Cohen, 24 hours a day to get help.