Tampa COVID-19 Economic Injury Disaster Loan Fraud Lawyer

The COVID-19 Economic Injury Disaster Loan (EIDL) program is a major piece of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the federal government’s response to the economic setbacks suffered by small businesses impacted by COVID-19 shutdowns and downturns. The threat to health and safety posed by the coronavirus pandemic, and the government’s response to that threat, have been unprecedented in modern times. Through the EIDL and other CARES Act programs, the government has sent $2.2 trillion flowing to individuals and businesses across America to help them weather the storm.

Predicting an increase in government fraud due to this record-setting stimulus, the Department of Justice (DOJ) and other agencies have stepped up their investigation into fraud and subsequent enforcement actions. The Tampa white collar crime lawyers of Trombley & Hanes, P.A. have decades of experience as prosecutors and defense lawyers handling fraud allegations involving both criminal and civil liability. Learn more about EIDL fraud defense below, and contact Trombley & Hanes, P.A. in Tampa for advice and representation concerning a civil or criminal charge of EIDL fraud in Florida or nationwide.

What is EIDL?

The COVID-19 EIDL program was established to help small businesses recover from the impact of COVID-19 on their business through the provision of accessible and borrower-friendly capital. EIDL loans are low-interest, fixed-rate, long-term loans from the Small Business Administration (SBA) that provide working capital to meet operating expenses to help overcome the effects of the pandemic. Unlike the Paycheck Protection Program (PPP) which is eligible for loan forgiveness, an EIDL loan must be repaid. EIDL funds can be used to make regular payments for operating expenses, such as payroll, mortgage or rent, utilities and other ordinary business expenses. Loan proceeds can also be used to pay business debt incurred at any time in the past, present or future.

Loan amounts can be up to $2 million at a 3.75% fixed rate (2.75% for private nonprofits). The term of the loan is 30 years, with payments deferred during the first two years, although interest does accrue during that period. Collateral is required for loans greater than $25,000, and loans above $200,000 must be personally guaranteed. EIDL applications are accepted through December 31, 2021, and will continue to be processed for months afterward.

Generally speaking, businesses are eligible for EIDL if they have less than 500 employees or are operating within a designated industry. Businesses must be physically located in the United States or designated territory and must have suffered working capital losses due to the coronavirus pandemic. Credit score requirements also apply depending on the size of the loan request. See SBA guidance for specific rules on eligibility requirements, which are much more detailed than outlined here.

EIDL Fraud Defense

The DOJ has launched what it refers to as a “historic level of enforcement action” to combat COVID-19-related fraud, including schemes targeting the EIDL as well as the PPP and Unemployment Insurance programs. During the first year of the pandemic, the DOJ charged 474 defendants with criminal offenses involving over $569 million. The DOJ has been working with the U.S. Attorney’s Office and the Secret Service to quickly seize loan proceeds from fraudulent applications and pursue enforcement actions. In a two-pronged attack, the DOJ is pursuing both criminal and civil enforcement of EIDL fraud and other COVID-19 and CARES Act fraud litigation.

Only current businesses can apply for EIDL loans; newly-created entities are ineligible. One example of EIDL fraud is the act of applying for EIDL loans and advances on behalf of ineligible newly-created, shell or non-existent businesses. Yet EIDL eligibility requirements are neither simple nor straightforward. They can be confusing, and some ineligible entities might mistakenly apply, or the government might be wrong regarding the entity’s eligibility or intent to defraud the government.

Criminal prosecutions for EIDL fraud can include allegations of federal law violations such as bank fraud, wire fraud, mail fraud, making false statements to the SBA, and many others. Penalties for conviction of these offenses range from five years in federal prison and $100,000 to 30 years imprisonment and $1,000,000 in fines.

The COVID-19 fraud defense litigation team at Trombley & Hanes, P.A., understands the law and how to handle a criminal EIDL fraud case. The firm works to provide the government with documentation confirming the entity’s eligibility or proper use of funds. The firm works further to negotiate a favorable resolution with the government or defend the client’s interests in court.

Trombley & Hanes, P.A., also represents clients facing civil liability for EIDL fraud under laws such as the False Claims Act (FCA) and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). FCA liability can attach for knowingly submitting a false claim or making a false record or statement to get the government to pay a claim. Penalties currently range from $11,181 to $22,363 per violation. The FCA also authorizes private individuals to bring FCA claims on the government’s behalf, immensely broadening the number of claims and ways a business can be hauled into court to answer charges of EIDL fraud.

A FIRREA claim can be based on a violation of one of 14 different federal statutes, with penalties of $1.1 million per violation. In the case of continuing violations, penalties can be assessed at $1.1 million per day or $5.5 million per violation. The government can also use the pecuniary gain or loss associated with the claim as a basis for assessing penalties, which is how it pursued $5 Billion from S&P in the subprime mortgage financial crisis.

COVID-19 EIDL Fraud Defense in Tampa, Florida, and Nationwide

For help with defense against federal criminal charges or civil liability based on allegations of fraud connected with the COVID-19 Economic Injury Disaster Loan or other COVID-19 and CARES Act fraud defense litigation, contact Trombley & Hanes in Tampa at 813-229-7918. The firm serves clients throughout Florida and nationwide.

Frequently Asked Questions for COVID-19 EIDL Fraud Defense in Tampa, Florida, and Nationwide

What are the Most Common Types of Alleged COVID-19 EIDL Fraud?

The SBA and law enforcement agencies have been actively investigating and prosecuting cases of EIDL loan fraud, including those involving, but not limited to:

  • Loan applications using false information, such as inflating the number of employees, revenue, or expenses to obtain a higher loan amount than they are eligible for.
  • Individuals or businesses that submitted multiple EIDL loan applications using different identities or company names to receive numerous loans fraudulently.
  • Individuals that created fake businesses and provided fictitious information to the Small Business Association(SBA) to apply for EIDL loans they were not entitled to.
  • Individuals or businesses that misused EIDL loan funds for purposes other than those outlined in the loan program, such as personal expenses unrelated to business needs.
  • Individuals who used stolen identities to apply for EIDL loans, posing as legitimate business owners to receive the funds.
  • Individuals who submitted fabricated or altered documents to support their loan applications, misrepresenting the financial condition of their businesses.

If you are under investigation by federal law enforcement for your EIDL loan, contact our experienced COVID-19 Economic Injury Disaster Loan fraud attorneys in Tampa today to discuss your case so we can work on your customized defense strategy.

What are the Penalties for COVID-19 EIDL Fraud Convictions?

Criminal prosecutions for EIDL fraud can include allegations of federal law violations such as bank fraud, wire fraud, mail fraud, making false statements to the SBA, and many others. Penalties for conviction of these offenses range from five years in federal prison and $100,000 in fines to 30 years imprisonment and $1,000,000 in fines.

What are the Most Common Defenses for COVID-19 EIDL Fraud?

Each COVID-19 EIDL fraud case is unique and requires a thorough review before implementing a customized defense strategy. However, some of the most common defenses against EIDL fraud charges may include lack of intent to defraud, demonstrating that the loan or benefit was obtained legitimately, challenging the accuracy of the evidence, proving compliance with program requirements, and showing that any discrepancies were unintentional.

To learn more about your potential legal defense options, contact our experienced COVID-19 Economic Injury Disaster Loan fraud lawyers in Tampa today.

Which Federal Agencies Pursue COVID-19 EIDL Fraud Cases?

The Office of Inspector General, in collaboration with SBA, the U.S. Secret Service, other federal agencies, and financial institutions, has led the legal charge against EIDL fraud cases. Closer to home, the Middle District of Florida’s efforts to combat fraud related to COVID-19 included measures by the Criminal, Asset Recovery, and Civil Divisions, along with federal, state, and local law enforcement agencies. No matter which agency has contacted you about potential EIDL fraud, it is crucial to have a skilled COVID-19 EIDL fraud defense attorney in Tampa by your side before answering any questions from law enforcement.

What Type of Charges Can Be Filed Against Individuals and Businesses for EIDL Fraud?

Regarding allegations of defrauding the federal government, the U.S. Attorney’s Office often pursues multiple charges against individuals and businesses to ensure something will stick – if not the totality of the charges. That may include charging those allegedly involved in EIDL fraud with wire fraud, bank fraud, money laundering, racketeering, and conspiracy. Alone or combined, each of these charges is serious and requires partnering with a trusted EIDL fraud lawyer in Tampa to help ensure your rights are protected from the start. We can help, starting with an initial case evaluation

Sub Bridge