Fraud involving COVID-19’s Paycheck Protection Program (PPP), as well as health care fraud on a corporate level, can mean years in prison, even for such non-violent white-collar crimes.
Take the case of two brothers in Georgia and Florida. For a $1.6 million COVID-19 fraud scheme, the first brother was sentenced on April 10, 2023, to 2 years and 3 months in prison, and the second brother was sentenced to 2 years and 6 months in prison.
As reported by the U.S. Department of Justice, the brothers’ scheme involved fraudulent applications for $1.6 million in unwarranted loans through the PPP.
The PPP was set up in 2020 as a $953-billion business loan program via the Coronavirus Aid, Relief and Economic Security Act (CARES Act). It was designed to assist some businesses, nonprofit organizations, self-employed workers, sole proprietors and tribal businesses to continue paying their workers during pandemic shutdowns.
The PPP’s low-interest loans were devised to be fully or partly forgiven if a business retained its employee counts and kept its employee wages stable despite full or complete business shutdowns during the pandemic.
Court documents show that the brothers collaborated to submit fraudulent PPP loan applications by using fake tax documents and fabricating information for 3 companies, only 1 of which existed. That company had just 1 employee, but the PPP application for it claimed it had 41.
As a result, the brothers allegedly received $1.6 million in fraudulently obtained PPP loans.
According to The Wall Street Journal, though many business owners said PPP was a lifeline at the height of the COVID-19 pandemic, others took advantage of the PPP program’s open-door design since companies were allowed to self-certify their need for PPP funds with little actual vetting.
Federal authorities became aware of this and have been cracking down on PPP fraud cases since late 2020. In doing so, they have prosecuted more than 200 defendants in over 130 criminal cases.
They’ve also seized more than $78 million in cash proceeds derived from fraudulently obtained PPP funds, as well as many luxury items and real estate properties bought with them.
PPP fraud may be difficult to prosecute
On the other hand, prosecutors may have difficulty bringing some PPP fraud charges since Congress set such a low bar for obtaining the funds.
In addition, the requirements and guidelines for receiving funds were vague in the early stages of the PPP, and they often changed. As a result, many employers may have been confused and, despite trying to comply with application rules, they may have inadvertently exposed themselves to a fraud charge.
Houston’s Neal Davis Law Firm—an award-winning criminal defense firm that has won honors and recognition for its white-collar crime defense—stands ready to help persons facing a PPP fraud charge.
Did you know you can be charged with 18 different types of fraud in Texas? Understand your rights.
Corporate fraud also carries prison sentences
Three executives with Chicago’s Outcome Health technology startup were also convicted this week, in this case by a federal jury that cited their part in a $1 billion corporate fraud scheme.
According to USA Today, the company installed digital screens and tablets in physician’s offices and sold ad space on the screens to pharmaceutical companies. But the 10-week federal trial found that Outcome’s executives sold advertising inventory that they did not have, while also inflating metrics and under-delivering on ad campaigns.
The Department of Justice said that despite under-deliveries, “the company still invoiced its clients as if it had delivered in full.”
Trial evidence showed this allegedly occurred between 2011 and 2017 and led to Outcome Health taking in about $1 billion in fraudulently obtained funds, the DOJ said. Those included at least $45 million of overbilled advertising services.
The 3 executives were convicted on multiple counts. Their combined offenses included:
- Mail fraud
- Wire fraud
- Bank fraud
- Money laundering
- Making false statements to a financial institution
USA Today reports that the 3 executives were also found guilty of defrauding Outcome Health’s investors and lenders by overstating company revenues in 2015 and 2016.
A sentencing hearing has not yet been set, but the 3 may face years in prison. One of them has already announced plans to appeal.
You may think only violent crimes can bring harsh penalties like years or life in prison—but that’s not the case in Texas.
How long is it between sentencing and prison?
If and when sentencing with prison time is handed down, you may be wondering how long it takes to go from sentencing to prison for white-collar crimes such as theft and fraud.
That depends on the individual case. But keep in mind that white-collar crimes are non-violent crimes, and because of that, months can pass between sentencing and reporting to prison. Since the defendant is not deemed to be a violent threat or menace to society, immediate incarceration is less of a concern.
Some persons who were convicted of white-collar crimes proceed with a “voluntary surrender” to prison, rather than being directed to go straight to prison. The convicted person is given a date and a location for such voluntary surrender, at which time and place they must comply.
Still, despite delays, prison can be inevitable, even if an appeal is pending.
Yes, even celebrities can be sent to jail for white-collar crimes—and it happens more often than you might think.
Holmes must report to prison soon
Take the case of disgraced Theranos founder Elizabeth Holmes. ABC News reports that on April 11, 2023, she was denied her request to remain out of prison until her appeal was resolved. She thus must begin her prison sentence of 11 years and 3 months on April 27, 2023.
Back in January of 2022, Holmes was convicted of defrauding investors out of over $100 million over a blood-testing device that did not work as advertised. Her convictions included 3 counts of wire fraud and 1 count of conspiracy to commit wire fraud.
Her sentencing hearing followed in mid-November of 2022. At that time, she was ordered to report to prison on April 27, 2023.
That means Holmes has managed to avoid prison for about 15 months following her conviction. But her freedom ends soon.
Get an experienced white-collar defense attorney
If you or a loved one faces a charge such as fraud or theft, you must get an experienced, skilled and knowledgeable white-collar defense attorney or lawyer to fight for your legal rights. Even non-violent crimes can lead to years in prison.
