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Disaster relief loan application leads to fraud charges

| Aug 28, 2020 | White Collar Crimes |

Federally guaranteed disaster relief loans can come with a demanding application process. After obtaining a borrower’s information, a loan officer must next verify its accuracy. 

After a first review of an application, a loan officer submits it to the government for approval. The data may then also work its way through several different computer systems and funding agents during the review process. 

Due diligence requires a confirmation of data

Information inconsistent with existing database records may require further confirmation. As noted by the Federal Deposit Insurance Corporation, willfully providing false information could result in fraud charges. 

To obtain a fraud conviction, a prosecutor must prove that the applicant knowingly presented falsified information. If the court finds an intent to deprive the government of loan funds, a defendant may face up to 30 years imprisonment. 

Prosecutors charge a small-business owner with fraud

Prosecutors charged a small-business owner in the Dallas-Fort Worth area for allegedly providing a false statement on an emergency relief loan application. As reported by KRLD News Radio, the owner of a wedding planning company listed 126 employees on his federal assistance request. He reportedly received more than $1.5 million to pay employees’ salaries, which prosecutors allege do not exist. 

The defendant certified he needed emergency funds to meet payroll obligations, but prosecutors allege he instead paid his mortgage, purchased a new car and transferred the money to his stock account. He entered not guilty pleas to a range of charges including money laundering and wire fraud. 

If borrowers use the U.S. mail system or an internet connection to allegedly submit inaccurate application information, they could face a federal wire fraud charge. A strong defense, however, may serve to counteract allegations of willfully falsifying information. 

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