Miami EIDL Loan Fraud Attorney

In response to the impact on small businesses caused by COVID-19 and the global pandemic, Congress passed the CARES Act on March 29, 2020. The Act created loan programs like the Economic Injury Disaster Loan (EIDL). In July of 2020, the Office of the Inspector General (OIG) for the Small Business Administration (SBA) reported over 5,000 complaints of suspected fraud arising from financial institutions. The OIG’s initial investigation identified $250 million in loan and advanced grants were approved to potentially ineligible recipients as well as approximately $46 million in potential duplicate payments.

In 2022, the Department of Justice (DOJ) established a Strike Force to combat and prevent EIDL Loan Fraud among other fraudulent schemes. The DOJ has charged and convicted several individuals connected to EIDL Loan Fraud and continues to investigate as the numbers of potentially fraudulent recipients have risen since the OIG’s latest report.

What Is an EIDL Loan?

The COVID Economic Injury Disaster Loan (EIDL) program is a government loan initiative created to aid nonprofit organizations and small businesses in recovering from the COVID-19 economic crisis by providing rapid, borrower-friendly funds. Loans are instantly available and may be utilized to take care of several urgent business expenses. Loans can be used to cover regular operational costs, provide working capital, prepay or settle commercial debt, as well as to pay for things like rent, the cost of items supplied, wages, and federal business debt. The SBA started approving loans up to $500,000 and increased the maximum loan to $2 million to eligible recipients.

Small business owners must have complied with the eligibility requirements to be approved for an EIDL Loan. Businesses and nonprofits, including sole proprietorships or self-employed small business owners with 500 or less employees, were allowed to apply. Businesses applying must have been active or created by January 2020. A credit score of 570 or higher was required and the applicant must be a U.S. citizen or permanent resident. Businesses are also required to submit federal income tax or the business’ financial statements as well as IRS forms to verify income.

What Is EIDL Loan Fraud?

If you submitted fabricated or false paperwork, misrepresented your income, or supplied other incorrect information on an EIDL loan application, you could be subject to an investigation for loan fraud. EIDL loan fraud may result in a number of federal criminal charges, including bank fraud, wire fraud, mail fraud, identity theft, and making false statements to a financial institution, depending on the particulars of your case.

Types of EIDL Loan Fraud

If you are a subject of an EIDL loan fraud investigation, you may be charged with several federal financial offenses. These offenses might include:

1. Bank Fraud – Bank fraud is a conspiracy to defraud a financial institution that is federally insured. All EIDL loan applications had to be processed via a certified bank, thus, if a fact was misrepresented or fraudulent supporting documents was provided, bank fraud might be a potential offense related to EIDL loan fraud.
2. Wire Fraud – Wire fraud is a conspiracy to defraud a person or an entity of money utilizing wire, radio, or television transmission that impacts interstate commerce. Since EIDL loans are received through wire transfers from the SBA to the borrower's bank account, any investigation into EIDL loan fraud is likely to lead to a wire fraud offense.
3. Mail Fraud – Mail fraud is a conspiracy to defraud a person or an organization of money via the United States Postal Service. If someone used the mail to provide false paperwork to their lender or to the SBA in support of their EIDL loan application, they may be charged with mail fraud. 
4. Identity Theft – Identity theft is the illegal use of another person's identity to pursue a crime. If a person applies for an EIDL loan using someone else's identity rather than their own, they may be charged with identity theft.
5. Money Laundering – Money laundering is the act of moving funds through a series of transactions to conceal the proceeds of illegal activity while making them look legitimate.
6. False Statements to Financial Institution – False Statements to Financial Institution is a crime that can be brought against someone who fabricates information on an EIDL loan application. Anyone who knowingly submits a false EIDL loan application to a bank that is federally insured may be charged with this offense.

Who Investigates EIDL Loan Fraud? 

Several federal agencies including the Federal Bureau of Investigations (FBI), the Office of the Inspector General (OIG), the U.S. Department of Justice (DOJ), and the Internal Revenue Service (IRS), may investigate EIDL Loan Fraud.

What Are the Possible Penalties for EIDL Loan Fraud?

Each of the criminal charges above carries serious potential consequences.

1. Bank Fraud – Bank fraud is punishable by a $1,000,000 fine and up to 30 years in federal prison.
2. Wire Fraud – Wire fraud is punishable by a $1,000,000 fine and up to 30 years in federal prison.
3. Mail Fraud – Mail fraud is punishable by a $1,000,000 fine and up to 30 years in federal prison.
4. Identity Theft – Identity theft is punishable by a $1,000,000 fine and up to 30 years in federal prison. A minimum mandatory term of two years may also be imposed as punishment for the offense, and this sentence will run concurrently with any prior convictions.
5. Money Laundering – Money laundering is punishable up to $500,000 fine or twice the value of the money obtained and up to 20 years in federal prison.
6. False Statements to Financial Institutions – False statements to a financial institution is punishable by a $1,000,000 fine and up to 30 years in federal prison.

In addition to the previously indicated penalties, a conviction for any of these criminal offenses may trigger deportation procedures if the defendant is not a citizen of the United States.