SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILINGS

 SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILINGS

Many people are contacting us, asking if wrongfully applying for or misusing SBA EIDL funds constitutes a crime or could subject them to civil or criminal penalties. 

The answer depends on the "facts and circumstances" of each case. 

The first fact to consider is whether the action was a mistake (negligent) or willful. Negligent actions are not criminal, but willful actions may be. 

Second, what is the dollar amount involved? Was it a misapplication of $25,000.00, $50,000.00, or $1,000,000.00? The SBA and Department of Justice are busy organizations that tend to focus on larger dollar amounts when pursuing criminal actions.

Third, were the involved parties part of a criminal gang or ring with prior criminal actions or convictions or first offenders.

Fourth, reported criminal cases often involve situations where loans were obtained with no legitimate business purpose. Instead, the funds were acquired through false representations to the SBA, with the intent to steal from or defraud the government. 

Consequently, wrongfully applying for or misusing SBA EIDL loans can lead to civil or criminal penalties.

The SBA loan documents signed by all borrowers say that whoever wrongfully misapplies  SBA loans shall be civilly liable to the Administrator in an amount equal to one-and-one half times the original principal amount of the loan under 15 U.S.C. 636(b).

Second in addition, any false statement or misrepresentation to the SBA may result in criminal, civil or administrative sanctions including, but not limited to: 1) fines, imprisonment or both, under 15 U.S.C. 645, 18 U.S.C. 1001, 18 U.S.C. 1014, 18 U.S.C. 1040, 18 U.S.C. 3571, and any other applicable laws; 2) treble damages and civil penalties under the False Claims Act, 31 U.S.C. 3729; 3) double damages and civil penalties under the Program Fraud Civil Remedies Act, 31 U.S.C. 3802; and 4) suspension and/or debarment from all Federal procurement and non-procurement transactions. 

Statutory fines may increase if amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

Third,if one intentionally misuse the funds, it could be considered fraud, wire fraud, money laundering, false statements, or theft of government funds. which are criminal offenses. 

Fraudulent use of SBA loan proceeds may lead to  fines, penalties, and potentially imprisonment.

Fourth, The dischargeability of SBA EIDL loans in Chapter 7 Bankruptcy is governed by bankruptcy law section  11 U.S.C.A. § 523(a)(2)(B). That section  provides for non-dischargeability of debts obtained by false representation or fraud. 

Clients with questions about defaulted SBA loans and civil or criminal penalties, or discharging those loans in Bankruptcy should contact Jim Shenwick, Esq  jshenwick@gmail.com  917 363 3391

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link to schedule a telephone call with me.

 https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

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Other SBA EIDL Blog Posts by Jim Shenwick, Esq.

Defaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loans https://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.html SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023 https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.html SBA EIDL Penalties if an SBA EIDL Loan is Not Repaid https://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.html Misuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filings https://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.html SBA EIDL HARDSHIP PROGRAM https://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.html Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Code https://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.html Offers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary! https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.html EIDL LOAN WORKOUTS AND BANKRUPTCY https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html EIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html EIDL Defaulted Loans https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan" https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html PPP & EIDL Fraud https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loans https://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html