Small Business Administration Paycheck Protection Program (PPP) COVID Crimes

The numerous programs offered by government and private agencies during the COVID-19 epidemic, including the SBA Paycheck Protection Program, are directed at assisting people in need and helping everyone in the nation to survive the coronavirus pandemic and crisis intact. Although one likes to believe their noble purpose protects them from criminality, coronavirus fraud lawyers in New York and beyond know that these programs are no less vulnerable to larceny, fraud, and theft just as those accused of violating the law or equally subject to arrest, indictment, and incarceration. As always, the more money that is on the line, the more likely it is that schemes and other criminal acts will occur, and the more attractive it is to people who might manipulate the system to their benefit.

There are many theft-related charges that can apply to deception as it relates to the SBA and PPP, such as Grand Larceny, Forgery, Offering a False Instrument for Filing, and Falsifying Business Records. Whichever charge or charges are applicable in your particular situation, you can be sure that prosecutors will aggressively pursue people who allegedly steal or obtain funds and monies unlawfully, especially given that these programs are aimed at assisting those desperately in need during this unprecedented time.

Much like the SBA Economic Injury Disaster Loans and Advances, the PPP is another low interest, no fee loan offered by the SBA to help with cash needs as it relates to employee retention. The particular benefit is that if the business maintains their current payroll and keeps their employees on the books through this crisis, a large portion of the loan will be forgiven and wiped out. This can be especially enticing for a small business owner, given the potential for the forgiveness of the loan while still offering a very large loan amount.

There are all kinds of different crimes and statutes that are applicable to theft and fraud in securing a loan through the Paycheck Protection Plan program offered by the SBA. The most readily apparent of such charges that a New York criminal defense attorney will likely see are Grand Larceny, Forgery and Offering a False Instrument for Filing. All of these kinds of offenses have to do with charges that, if convicted, would result in a permanent criminal record with life-altering consequences. Not just any petty misdemeanors, these kinds of offenses can, and most likely will, be charged as felonies punishable by multiple years in state prison. In essence, these crimes amount to filing a written document with a public office that contains false information (Offering a False Instrument for Filing), general theft of money or property with a value in excess of $1,000.00 (Grand Larceny), and dishonestly altering documents such as those that would be submitted together with a PPP loan application (Forgery).

The consequences and criminal punishments that go along with these kinds of offenses depend on the degree of the offense under which a person has been found guilty. For example, Grand Larceny in the Third Degree, Penal Law 155.35, is a felony and punishable by up to 2 1/3 to 7 years in state prison, or 3 ½ to 7 years if the person has prior felony convictions, while Grand Larceny in the Second Degree, Penal Law 155.40, is a C felony, which is accordingly punishable by up to 5 to 15 years or 7 ½ to 15 years in state prison depending on the criminal history. The threshold for this much more severe charge being levied is the relatively low amount of $50,000, at least in the context of business operations, especially when you consider that the maximum amount of a PPP loan is $10 million.

Relatedly, Forgery in the Second Degree, Penal Law 170.10, is punishable by as long as 7 years in state prison as reflected above, and Offering a False Instrument for Filing, Penal Law 175.35, is punishable by as much as 1 1/3 to 4 years in state prison for a person with no record and 2 to 4 years incarceration for a predicate felon.

The Paycheck Protection Program is a very borrower-friendly loan, of course, and one would expect that there will therefore be a high degree of oversight in order to protect against abuse and to allow people to take advantage of this kind of beneficial plan. But this also means that there can be far more potential snares encountered as compared to other, more traditional loans or grants. The potential for theft-related accusations doesn't just end at the application, of course. It quite obviously continues throughout the mandated reporting period that is part of the plan, as well as when it comes time to provide the required documentation for forgiveness.

A very simple and obvious example would be a business owner who applies for a PPP loan, lays off a quarter of their employees, and then in nine months hires back the same number of staff, maybe at a lower salary given the impact of COVID-19 on the business world, and then submits the necessary paperwork for loan forgiveness, which would of course make clear that the number of employees has not changed. Another example might be reporting employees you never had or increasing salaries in order to secure more monies from the government. It's very easy to see how, depending on the particulars of the program and lending agreement, this might be seen as not only as misuse, but simple fraud, which could in turn result in very serious criminal allegations.

If you find yourself wide eyed in front of a judge accused of any coronavirus or COVID fraud crime relating to the theft of thousands or perhaps millions of dollars, preparation, planning, and the right defense is essential. If you are facing such charges, or are subject to questioning by the NYPD, the AG, or a prosecutor, there can be no doubt that countless questions are racing through your head and decisions that must be made. Other than asking for a lawyer if surprised by detectives or investigators, your first thought and consideration should and must be to contact and hire an experienced and zealous advisor such as the former Manhattan prosecutors and criminal lawyers at Saland Law. Very simply, when your life and all that you have loved and worked for are in danger, there is no substitute for experience, knowledge, and advocacy.

Call the New York theft lawyers and former Manhattan prosecutors at (212) 312-7129 or contact us online today.