If your business was the recipient of an SBA loan or pandemic relief program, it is essential to know what SBA OIG investigations entail. The Small Business Administration Office of Inspector General (SBA OIG) investigates allegations of fraud involving SBA programs, which include PPP and EIDL loans.
While many investigations do not result in criminal charges being filed, knowing how SBA OIG investigations are initiated and what to expect is vital. The Kirlew Law Firm can show Orlando business owners how to respond when they are asked questions. A Miami federal investigation lawyer from our firm can sit in on interviews, handle document requests, and speak to agents on your behalf.
Know What the SBA OIG Investigates
The SBA Office of Inspector General is an independent oversight agency tasked with detecting fraud, waste, and abuse involving SBA programs. The office works with agencies like the FBI, the Internal Revenue Service Criminal Investigation Division (IRS-CI), and the U.S. Department of Justice when investigating potential criminal violations.
An SBA OIG investigation looks at:
- Loan applications
- Financial documents submitted in support of the loans
- How the money was used
- Communications regarding government-backed funding
The SBA OIG’s job is to establish whether federal SBA laws were broken, not whether mistakes were made.
An Investigation Does Not Always Result in Criminal Charges
The SBA Office of Inspector General reports that it has worked with the Justice Department to secure more than $86.7 million in taxpayer funds returned by financial institutions related to suspect PPP and EIDL loans. These recovered funds are linked to over 1,000 loans, adding to the more than $2.8 billion recovered by investigative activities stemming from suspected fraud within SBA COVID-19 relief initiatives.
Even with this information, it’s important to note that getting a subpoena, audit request, or question from investigators can be intimidating. However, this does not mean that a criminal charge may be filed against an individual or business.
Federal investigators and prosecutors spend months poring over evidence. During that time, the government may:
- Conduct interviews of potential witnesses.
- Compare tax records with the information on loan applications.
- Subpoena banking transactions.
- Look for evidence by reviewing business documents.
Some investigations never result in criminal prosecution, as the government has determined there is insufficient evidence to meet the legal standard required to prove that a crime has been committed.
Maintain Your Business Records
Keeping meticulous and accurate business records is one of the most beneficial steps business owners can take. Investigators may look extensively into your business records, including bank and payroll statements.
Accurate recordkeeping can show the reasons for potential discrepancies and provide context for financial transactions that may otherwise look suspicious. Businesses should also keep documents that show how SBA loan proceeds were used and how the reason for those expenditures complied with the program requirements.
Intent Is Relevant
Many federal fraud crimes require prosecutors to show that a person made a false statement or engaged in a fraudulent scheme willfully and knowingly. It’s important to remember that genuine mistakes, accounting oversights, or confusion about intricate program instructions aren’t inherently proof of criminal intent.
For instance, 18 U.S.C. § 1014 prohibits a person from knowingly making a false statement to a financial institution in connection with certain lending transactions. Whether a statement was intentionally false or simply inaccurate can become an important point raised during an investigation.
Hire an SBA Loan Fraud Lawyer Before Speaking to Investigators
It is always advisable to hire an SBA loan fraud lawyer early during an investigation. An SBA loan fraud attorney can evaluate subpoenas, explain document requests, and speak to investigators if necessary. Your counsel can review financial records and identify information that can support your position.
Many federal criminal cases involving SBA investigations in Central Florida are heard at the George C. Young Federal Annex Courthouse at 401 West Washington St., Orlando, FL 32801.
Why Hire Us?
Federal financial crime investigations often involve the review of detailed documents, complex legal issues, and a host of procedural rules. The Kirlew Law Firm represents individuals and business owners who face state and federal criminal investigations throughout Florida. Our founding attorney, Brian Kirlew, is a board-certified criminal trial lawyer with more than 5,000 cases, 65 jury trials, and 7,500+ depositions.
FAQs
Can an SBA OIG Investigation Affect My Business If I Have Not Been Convicted of a Crime?
Yes. Even though an investigation is pending, it may impact business operations, financing, or future relationships with lenders and vendors. A business may also need to devote significant time and resources to respond to subpoenas or document requests. An investigation, however, does not prove that a crime occurred. Many investigations are completed without charges ever being filed.
Does the SBA OIG Only Investigate Pandemic Loans?
No. The SBA OIG has poured considerable resources into investigating claims of PPP and EIDL fraud. However, it also examines suspected fraud concerning other SBA loan programs, government contracts, grants, disaster aid, and any misconduct that has an effect on SBA operations. The OIG’s mission is to secure the integrity of all SBA-administered programs.
Can an SBA OIG Investigation Involve Former Employees?
Yes. As part of an investigation, the OIG may interview former employees if the OIG investigators believe that their information may be relevant to the case. A former employee’s statement could assist OIG investigators in understanding how certain financial records were created. They can also see if the former employee had any involvement in preparing documents that were ultimately provided to the government.
Can Lenders Report Suspected SBA Loan Fraud?
Yes, banks and other participating lenders who provide SBA loans can report suspicious activity if they notice discrepancies throughout the loan process or afterward. Financial institutions may be required to report information to federal authorities under certain circumstances. Information provided by a financial institution may be one of many factors that could lead to a broader investigation by the federal government.
Consult The Kirlew Law Firm About Your Case
If you have been accused of loan fraud by the SBA OIG, contact The Kirlew Law Firm. We can explain SBA OIG investigation laws to you and advocate for your future. Let us handle your legal needs.
