Congress passed the CARES Act in March of 2020, providing billions of dollars in economic relief to help American businesses cope with hardships caused by the COVID-19 pandemic. As part of the CARES Act, the Economic Injury Disaster Loan (EIDL) Program provided businesses with up to $150,000 in loans that could be used to pay debts, payroll, and other expenses. The loans had extremely favorable repayment options, including a 3.75% interest rate, a 12-month deferral period, and a 30-year repayment period.
To allow businesses to receive funding quickly, EIDL applications were submitted online, and the rules regarding how a business could prove income on an EIDL application were lax. In fact, EIDL applications did not require an individual to submit any documentation to support their claimed 2019 income. Therefore, many applicants overstated gross receipts in order to qualify for higher loan amounts. Because of the lack of oversight, many of these loans were funded based upon false statements regarding income.
Fraud investigators are also identifying and prosecuting people who submitted false documentation of their income to obtain a higher EIDL loan, in excess of $150,000.
In July of 2020, the Small Business Administration Office of the Inspector General (SBA-OIG) identified unprecedented indicators of potential fraud in EIDL loan applications. In August of 2020, federal prosecutors began targeting individuals and businesses who submitted false documentation to obtain relief under the EIDL Program. President Biden recently announced a new Director of COVID Fraud to spearhead the Justice Department’s prosecution of these cases.
EIDL funds can properly be used for:
EIDL funds cannot be used to:
Due to the loss of millions in COVID fraud, the government is vigorously seeking to identify situations in which business owners and individuals improperly applied for and used EIDL funds in an effort to prosecute the offenders and seek restitution and forfeiture.
A person can face federal criminal charges for:
Someone who is under investigation for EIDL fraud could face various federal criminal charges, including:
Fortunately, a fraud charge does not always result in a conviction. An experienced federal criminal defense attorney can defend you during an EIDL fraud investigation, minimize the likelihood of being charged with a crime, and protect your rights.
As with any criminal case, to secure a conviction, the government must prove you guilty beyond a reasonable doubt. The government must prove that you knowingly and intentionally misrepresented facts on an EIDL application.
Good faith is a common defense to any fraud charge. If you genuinely believed that your actions were legitimate, you may be able to avoid a fraud conviction. Also, there is an important distinction between an innocent mistake and fraud. An experienced federal criminal defense lawyer must analyze the facts of your case and determine the likelihood of success on the merits of your case.
If you are under investigation or have been charged with a federal crime due to alleged EIDL fraud, you must act quickly to hire an experienced federal criminal defense attorney.
Hope Lefeber has been defending people accused of crimes in federal court for more than 30 years. She began her career as an Enforcement Attorney with the Securities and Exchange Commission. Today, she defends people who have been accused of white-collar crimes in federal court.
Ms. Lefeber’s clients describe her as meticulously prepared and a tenacious and fierce advocate. She has defended executives of Fortune 500 Companies, businessmen and women, professors, doctors, accountants, healthcare professionals, and lawyers who have been charged with federal crimes. She has also lectured on federal criminal law topics and appeared on TV as a legal expert.
If you are under investigation or have been charged with EIDL fraud, contact Hope Lefeber today.