DOJ Takes Aggressive Approach in Charging PPP Loan Frauds as “Conspiracy”

The Federal Docket

August 21, 2020

Our firm has been keeping up with the latest developments in the DOJ’s prosecution of various individuals accused of fraudulently obtaining loans from the  government’s Paycheck Protection Program. For a while, the DOJ’s press releases mostly reflected cases brought against individuals. Recently, however, the DOJ has been bringing multi-defendant indictments alleging various “conspiracy charges.”

In the context of criminal charges, a “conspiracy” simply means an agreement between multiple people to commit a crime. Prosecutors like charging multiple defendants together and alleging conspiracy charges because it allows them to use a defendant’s statements against his other co-defendants and lets in other evidence that might not be admissible in a case brought against one defendant alone.  Here, prosecutors are accusing groups of people with working together to commit fraud in connection with obtaining PPP loans.

In Georgia, for example, five people were charged with conspiracy to commit wire fraud, bank fraud, and money laundering based on allegations that they worked together to apply for $4 million worth of PPP loans on behalf of several businesses they were associated with, but didn’t use the money for those intended uses. The five individuals separately owned the five companies that applied for loans, but the government is charging them together as a “conspiracy” by using circumstantial evidence that the individuals were working together. For example, the indictment alleges multiple “smaller conspiracies” based on one of the defendants partnering with each of the other defendants to obtain a PPP loan. The loan applications for each company also list the exact same number of employees and amount of payroll too. However, a competent defense lawyer would consider filing a motion to sever the defendants from each other so they can be tried separately rather than risk guilt by association.

In Florida, nine people have been charged, separately for the moment, for a “nationwide scheme” that involved over 90 PPP loan applications and $24 million. The defendants are accused filing fraudulent loan applications for their own companies and then taking part of an “organized effort” to recruit others, who they would submit fraudulent loan applications on behalf of in exchange for kickbacks of their PPP loans. While the defendants have been charged informally and separately for the time being, the case will likely progress to a multi-defendant, multi-count indictment.

Click here for a primer from our firm on the types of charges most common in PPP Loan Fraud prosecutions and the available defenses.

Tom Church - Tom is a trial and appellate lawyer focusing on criminal defense and civil trials. Tom is the author of "The Federal Docket" and is a contributor to Mercer Law Review's Annual Survey in the areas of federal sentencing guidelines and criminal law. Tom graduated with honors from the University of Georgia Law School where he served as a research assistant to the faculty in the areas of constitutional law and civil rights litigation. Read Tom's reviews on AVVO. Follow Tom on Linkedin.

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