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How COVID-19 and SBA Loan Fraud Can Impact You

Earlier this year, Congress passed, and the President signed, an unprecedented economic stimulus package, called the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It is meant to help businesses and employees survive the financial devastation COVID-19 has wreaked on the American economy.

A provision of the CARES Act, named the Paycheck Protection Program (PPP), permits Small Business Administration-approved (SBA) lenders to fund relief loans that, unlike loans during previous crises, do not require any personal guarantee or collateral from borrowers. The money is intended to primarily cover payroll, but funds can be used for other expenses. Ultimately, if a business uses the funds as outlined in the CARES Act, the federal government will forgive the loans.

The Paycheck Protection Program and Potential Fraud

The moment the CARES Act became law, people expressed concern about fraud associated with the federally funded programs it created. The government has made it clear to SBA-approved lenders that they must ensure borrowers are not defrauding the PPP.

In addition to those seeking to defraud the PPP, fraudsters immediately targeted those eligible to apply for the program. Many victims were fooled into providing personally identifiable information, which resulted in fraudsters committing identity theft.

Task Forces Focused on Investigating Coronavirus-related Fraud

To combat PPP fraud concerns, the Department of Justice created a website for victims to report coronavirus-related fraud. Each U.S. Attorney’s Office has been ordered to create task forces to prosecute coronavirus-related fraud in conjunction with the Department of Justice’s Fraud Section. If you applied to the SBA loan program, even if you did not receive funds, you should be concerned that the government will target you for an investigation.

The Right to Remain Silent During a Criminal Investigation

We have previously discussed how federal prosecutors use, and abuse, false statement crimes, and how they have done so in the context of SBA funding fraud and healthcare fraud. While the government will aggressively investigate and prosecute coronavirus-related fraud, prosecutors get it wrong even with every tool at their disposal. For instance, the news has been so hyper-focused on COVID-19 that most outlets failed to meaningfully cover an embarrassing end to the Special Counsel’s indictment of Russian companies alleged to have interfered with the 2016 U.S. presidential election. After the companies began contesting the evidence in U.S. District Court, the indictment was voluntarily dismissed. Even when federal prosecutors had the entire Department of Justice at their disposal, they got it wrong.

We have often reminded you how important it is not to provide a voluntary interview when law enforcement shows up asking questions. The government always has the burden of proving that a person violated criminal law. It is never the burden of citizens to prove that they are innocent. Speaking to law enforcement without an attorney is tantamount to accepting a burden to prove you are innocent.

In 2001, the Supreme Court of the United States said: “But we have never held, as the Supreme Court of Ohio did, that the privilege is unavailable to those who claim innocence. To the contrary, we have emphasized that one of the Fifth Amendment’s ‘basic functions’ to protect innocent men...‘who otherwise might be ensnared by ambiguous circumstances…’” The Court went on to say, “We recognized that truthful responses of an innocent witness, as well as those of a wrong-doer, may provide the government with incriminating evidence from the speaker’s mouth.”

Many of our corporate and individual clients who followed our advice about remaining silent had investigations closed without charges.

Retain Legal Representation by Calling Law Offices of Horwitz & Citro, P.A.

Although it might be intimidating to be investigated by a government agency and you might want to assert your innocence by honestly answering agents’ questions, it’s crucial to invoke your right to remain silent. No matter who comes knocking at your door, politely decline to provide statements about the case until you’ve spoken with an attorney.

At the Law Offices of Horwitz & Citro, P.A., our primary goal is to protect the liberty of our clients in Orlando and the surrounding areas and to ensure that the adverse consequences of arrests or convictions are minimized.

To request your free initial consultation, call (407) 901-5852 or contact us online today.