Prosecutors pursue PPP loan fraud in Maryland

In recent months, Maryland, like the rest of the country, has seen an uptick in PPP loan fraud prosecutions. These cases are just winding their way through the courts, but it seems likely they will continue to be a focus of the U.S. Attorney’s office in Baltimore, Maryland, long after the peak of the pandemic.
Over the past year, the U.S. Attorney’s Office has put together teams of prosecutors to handle these cases. The prosecutors will draw on extensive investigative resources from various federal agencies. These cases are extremely serious for criminal defendants because they could result in prison time, large restitution payments and fines.
Nationwide, federal prosecutors have indicted over 1,500 defendants for PPP loan fraud, and that number will continue to grow. In August of this year, Congress passed a law that extended the statute of limitations for PPP loan fraud to ten years. In September, the Department of Justice created “Strike Force Teams,” which are groups of federal prosecutors and law enforcement agents tasked with investigating PPP loan fraud and bringing charges against those who allegedly defrauded the program. This demonstrates that the government is prioritizing prosecuting these types of cases.
In March of 2020, the CARES Act was signed into law. In addition to other provisions, the law provided $800 billion to support small businesses pay for their rent, utilities, and payroll. These loans can be forgiven if the loan was spent on eligible costs and at least 60% of the proceeds went toward payroll. Because the PPP loan program was rolled out so quickly, and with so little guidance, the program became a target for fraud. The government estimates that it has lost several billion dollars due to this fraud and is now trying to recoup some of that money it lost to PPP fraud.
PPP loan fraud can occur when a business or individual provides false information on a PPP loan application. Since there is no one law that that specifies PPP loan fraud, a defendant can be charged with multiple different crimes based on their conduct. Many of the defendants being charged in connection with PPP loan fraud are being charged with making false statements to federal agencies, bank fraud, wire fraud, and mail fraud. These are serious crimes.
Just because someone is charged with PPP loan fraud, however, does not mean they will be convicted. The government still has to prove beyond a reasonable doubt that the targeted individual intended to defraud the government or financial institution by making false, material statements on their loan applications that would induce the lender to grant the application. Due to the confusing guidelines about who was – and was not – eligible for a PPP loan, it is possible that the government cannot prove the intent to commit fraud.
If you believe you are under investigation for PPP fraud or have been charged with PPP loan fraud, we recommend that you contact a criminal defense attorney as soon as possible.