Corporate Audits for PPP Loan Fraud

Dr. Nick Oberheiden is a nationally recognized expert on PPP loan laws
and has been seen on Forbes, CNBC and Fox Business.
Speak with Dr. Oberheiden today for a free consultation at 888-680-1745.

The SBA is auditing many Paycheck Protection Program (PPP) loan recipients at the time they submit their forgiveness applications, and the DOJ is aggressively targeting companies for PPP loan fraud. Conducting a corporate audit can help ensure that your company is not at risk for prosecution.

Conducting a corporate audit can serve a number of important purposes. It can determine whether company personnel are complying with internal policies and procedures. It can help identify inefficiencies and systemic failures. And, it can help companies prepare for possible allegations of fraud.

For companies that received federally-backed, forgivable loans under the Paycheck Protection Program (PPP), the risk of facing fraud allegations is high. The U.S. Treasury Department and U.S. Department of Justice (DOJ) have identified widespread fraud under the program, and this has triggered a wave of audits and investigations. The U.S. Small Business Administration (SBA) is auditing many PPP loan recipients at the time they submit their forgiveness applications, and the DOJ has already filed criminal complaints in numerous cases of alleged PPP loan fraud.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Conducting a Corporate Audit to Prepare for a PPP Loan Fraud Audit or Investigation

In order to mitigate the risk of receiving a repayment request (as opposed to being granted forgiveness) or facing allegations of civil or criminal fraud, PPP loan recipients can conduct internal corporate audits focused on proactively identifying and addressing any compliance concerns. Conducting corporate audits for PPP loan fraud allows companies to make informed decisions, and it allows them to prepare for any federal allegations that may be forthcoming.

At Oberheiden P.C., we assist companies with conducting corporate audits, and we also represent companies in federal audits and investigations. While our federal compliance and defense practice is general in scope, we are representing many companies with respect to PPP compliance and PPP loan fraud defense during the COVID-19 pandemic. Our firm is comprised entirely of senior-level attorneys and investigators, and we have handled thousands of audits and investigations across the country both as defense counsel and as former prosecutors and agents with the federal government.

When Should Companies Conduct Internal Audits Regarding PPP Loan Compliance?

For most PPP loan recipients, the question is not whether they should conduct an internal compliance audit, but rather when the audit should be conducted. Currently, we are advising many of our clients to conduct audits in four distinct situations:

1. There are Concerns about PPP Loan Compliance

If there are concerns about PPP loan compliance for any reason, then an audit should be initiated promptly in order to determine what issues exist and what needs to be done (or what can be done) in order to rectify them. Concerns about PPP loan compliance may arise due to issues and events such as:

  • Discovering that multiple departments submitted PPP loan applications
  • Learning about PPP rules and regulations of which company personnel were previously unaware
  • Learning that PPP loan funds have been used for unauthorized purposes
  • Having insufficient documentation of expenditures from the company’s PPP loan account
  • Having failed to adopt compliance policies and procedures prior to or upon the receipt of a PPP loan

When concerns such as these exist, the company’s priority should be to identify the scope of the issue and the company’s potential risk exposure, and then to take appropriate responsive or remedial action as soon as possible. Whether an issue can be fully rectified or it is necessary to focus on liability mitigation, the key is to be able to make informed decisions before the SBA or DOJ finds evidence of PPP loan fraud.

2. The Company has a High Volume of PPP Loan Transactions or has Multiple Employees Involved in Administering Its PPP Loan Account

For larger companies that received PPP loans, maintaining compliance with the terms of the program can present a number of administrative challenges. In order to demonstrate that the funds are only being used for authorized purposes (i.e. payroll expenses, mortgage interest or rent, insurance premiums, and utilities), companies must keep their PPP loans segregated from other corporate assets, and they must thoroughly document all expenditures from their PPP loan accounts.

To this end, personnel who have access to companies’ PPP loan accounts should be trained on the program’s requirements, and companies should adopt controls designed to ensure consistency in documentation and compliance. Compliance audits should then be conducted periodically to ensure that all internal policies and procedures are being followed; and, to the extent that they are not, appropriate remedial action should be taken promptly.

3. The Company is Preparing to Submit its PPP Loan Forgiveness Application

Prior to submitting applying for forgiveness under the PPP, companies must ensure that they qualify. Under a mandate from the U.S. Treasury Department, the SBA is auditing PPP loan recipients at the time they submit their forgiveness applications. As stated in the SBA’s Paycheck Protection Program (PPP) FAQs:

“To further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application.”

If the SBA determines that a company is ineligible for loan forgiveness under the PPP, it can demand repayment of the loan plus interest; and, if an audit uncovers possible evidence of fraud, a civil or criminal investigation could follow. Companies can mitigate these risks by conducting internal corporate audits and ensuring that they have the requisite documentation prior to submitting their applications for loan forgiveness.

4. The Company is Being Targeted in a Federal PPP Loan Fraud Audit or Investigation

Finally, if your company is being targeted in a federal PPP loan fraud audit or investigation, you need to know what federal agents are going to find before they find it. This means launching an internal corporate audit right away. Our firm conducts emergency audits for companies as necessary, and our senior attorneys and former federal agents can get to work immediately if necessary in order to get out in front of the investigation and build a proactive defense strategy.

In PPP loan fraud investigations, companies (and their owners and executives) can face a broad range of federal charges. These charges can carry substantial penalties. In order to assert a successful defense, company owners and executives need to have a clear understanding of the circumstances as they exist, and they need to be able to make strategic decisions based on accurate and reliable information. The only way to do this is by conducting an unbiased internal corporate audit with the oversight of experienced federal compliance and defense counsel.

What is Involved in Conducting an Internal Corporate Audit for PPP Loan Fraud?

While there are several steps involved in conducting an internal corporate audit for PPP loan fraud, it is possible to execute these steps efficiently, and relying on experienced outside counsel can allow company owners and executives to gather the information they need without disrupting their day-to-day business operations. At Oberheiden P.C., we work with our clients’ executives and key stakeholders to outline the scope of their internal audits, and then we manage all aspects on the process to ensure that the audit is maximally effective and protected by the attorney-client privilege.

The critical steps involved in conducting an internal corporate audit focused on assessing Paycheck Protection Program compliance include:

  • Assemble the audit team
  • Collect all pertinent documentation
  • Evaluate all documentation collected
  • Assess any compliance risks or deficiencies
  • Determine next steps for compliance and/or defense

Learn more: Internal Audits and Investigations for PPP Compliance.

Why Choose Oberheiden P.C. for PPP Loan Fraud Audits, Investigations, and Defense?

Federal PPP loan fraud audits and investigations can lead to substantial repayment liability and the potential for civil or criminal penalties. As a result, companies need to take the necessary steps to ensure compliance with the terms and conditions of the Paycheck Protection Program, and they must rely on experienced outside counsel to uncover compliance deficiencies that have the potential to trigger invasive federal audits and investigations.

Here are five reasons why companies nationwide trust the federal attorneys and former federal agents at Oberheiden P.C.:

  • Federal Experience – Our former prosecutors and federal agents offer deep insights from prior experience with the DOJ, Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), and other agencies.
  • Federal Focus – Our firm’s practice is devoted to federal compliance and defense, and all of our attorneys and investigators have extensive experience in complex federal matters.
  • Nationwide Reach – With local affiliated counsel operating in cities across the country, we are able to efficiently represent companies nationwide.
  • 24/7 Accessibility – As a client of Oberheiden P.C., your company’s key personnel will have access to our senior attorneys and investigators 24/7.
  • Proven Results – We have helped companies in all industries across the country avoid federal charges through effective compliance and defense representation.

Speak with a Federal Compliance and Defense Lawyer at Oberheiden P.C.

If you would like to speak with one of our senior attorneys about conducting a corporate audit pertaining to PPP loan compliance, we encourage you to contact us promptly. For a free and confidential consultation, call 888-680-1745 or request a callback online now.

If you are under
investigation
you should contact us today

Contact the Experienced Attorneys of Oberheiden, P.C. Now for a Confidential Consultation

Contact Us Now