Section 1014 - Loan and credit applications generally; renewals and discounts; crop insurance

105 Analyses of this statute by attorneys

  1. Bank Fraud

    Garland, Samuel & Loeb, P.C.Don SamuelSeptember 1, 2015

    This issue, pursuant to United States v. Gaudin, must be submitted to the jury. United States v. Wells, 519 U.S. 482 (1997) Materiality is not an element of a bank fraud offense under 18 U.S.C. §1014 (false statement to a bank). United States v. Phillips, 731 F.3d 649 (7th Cir. 2013) In this en banc decision, the Seventh Circuit held that the defendants should have been permitted to introduce evidence that the defendants (who were charged with making a false statement to a bank in violation of § 1014) were told by their broker that lying in response to certain questions on a loan application form was permissible.

  2. False Statements / False Claims

    Garland, Samuel & Loeb, P.C.Don SamuelSeptember 1, 2015

    The Third Circuit held that the conviction for making a false statement could not be sustained, because what the defendant said was true and, moreover, it would be a manifest injustice to enforce the appeal waiver on this count of the conviction.United States v. Kurlemann, 736 F.3d 439 (6th Cir. 2013)A material omission on a bank loan application is not a “false statement” under 18 U.S.C. § 1014. A material omission may amount to fraud, but § 1014 only prohibits false statements, not fraud.United States v. Alexander, 679 F.3d 721 (8th Cir. 2012)In order to succeed in a § 1014 false statement prosecution, the government must establish that the victim financial institution was FDIC insured.

  3. For Business Owners, Allegations of Paycheck Protection Program (PPP) Loan Fraud Can Lead to Steep Federal Penalties

    Oberheiden P.C.Nick OberheidenJuly 17, 2020

    As a result, in pursuing cases for PPP loan fraud, the DOJ is relying on pre-existing federal statutes. For example, to date, the DOJ has filed criminal complaints in PPP loan fraud cases containing charges that include:Aggravated Identity Theft (18 U.S.C. § 1028A)Attempt (18 U.S.C. § 1349)Bank Fraud (18 U.S.C. § 1344)Conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349)Making False Statements to the Small Business Administration (SBA) (18 U.S.C. § 1014)Making False Statements to an FDIC-Insured Bank (18 U.S.C. § 1014)Making False Statements to Federal Agents (18 U.S.C. § 1001)Tax Evasion (26 U.S.C. § 7201)Wire Fraud (18 U.S.C. § 1343)This is consistent with the DOJ’s approach to combatting fraud targeting other types of federal government programs. Title 18 of the U.S. Code offers numerous ways for federal prosecutors to pursue charges—including charges that are not specific to any one type of fraudulent act or one specific federal program.

  4. PPP Forgiveness Application Certification May Lead to Enforcement Headaches

    Stinson LLPSusan EbnerMay 20, 2020

    s eligibility for the loan and loan forgiveness or risk being found ineligible for the loan and denied loan forgiveness.Significantly, the form also requires the borrower to certify that it has provided accurate and complete information and done so in good faith, without any intent to mislead, and that it is aware of the significant penalties it may be subject to in the event it is determined to have failed to comply with these requirements:The information provided in this application and the information provided in all supporting documents and forms is true and correct in all material respects. I understand that knowingly making a false statement to obtain forgiveness of an SBA-guaranteed loan is punishable under the law, including 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a Federally insured institution, under 18 USC 1014 by imprisonment of not more than 30 years and/or a fine of not more than $1,000,000.Whether and to what extent a borrower may be eligible for and receive forgiveness for its PPP loan clearly depends on the information provided in the forgiveness application and the initial loan application. This information must be accurate and complete as the application conditions forgiveness on whether the borrower provided true and correct information and documentation its PPP loan application and this forgiveness application for all “material” aspects of the applications.

  5. Indictments - Multiplicity

    Garland, Samuel & Loeb, P.C.Don SamuelSeptember 1, 2015

    This amounted to one scheme to defraud a bank under 18 U.S.C. §1344, not several schemes associated with each set of documents.United States v. Seda, 978 F.2d 779 (2d Cir. 1992)An indictment charging the defendant in two separate counts with bank fraud (18 U.S.C. §1344) and making a false statement to a bank in connection with a loan application (18 U.S.C. §1014) was multiplicitous. §1344 is a multi-faceted statute that is sufficiently broad to cover various types of misrepresentations and frauds.

  6. PPP Investigations, Settlements and Litigation on the Horizon

    Bass, Berry & Sims PLCMay 1, 2021

    This wave of criminal prosecutions and convictions related to some of the more flagrant abuses – individuals who fraudulently obtained funds from the program and then went on spending sprees for things like Lamborghinis, mansions, and private jet travel.These prosecutions focused on individuals and organized groups who obtained or used PPP funds fraudulently, often including charges for false statements (18 U.S.C. § 1001), aggravated identify theft (18 U.S.C. § 1028A(a)(1)), false statements in a loan application (18 U.S.C. § 1014), wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), and Title 26 tax charges. Along with these prosecutions came significant resources, including new fraud coordinators and data analytics teams across the country.

  7. Restaurant Revitalization Grant Program Provides Grants to a Wide Range of Eligible Entities

    Hinshaw & Culbertson LLPApril 28, 2021

    The applicant has not applied for nor received an SVOG.The applicant is not a publicly traded company.The information provided in the application and all supporting documents and forms is true and accurate in all material respects.The applicant understands that knowingly making a false statement to obtain a grant from the SBA is punishable under the law, including under 18 U.S.C. 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 U.S.C. 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 U.S.C. 1014 by imprisonment of not more than 30 years and/or a fine of not more than $1 million.If the applicant or any owner is listed on a Treasury Do Not Pay (DNP) list, the SBA will provide the applicant with notice and an opportunity to resolve the issue. If the applicant is unable to resolve the issue, the SBA may decline the application.

  8. Five Developments Identified in Criminal and Civil Enforcement of PPP Loans

    Foley & Lardner LLPJaime GuerreroMarch 18, 2021

    Specifically, it carries a mandatory term of imprisonment of two years, in addition to the punishment for any other underlying felonies that were committed in connection with the identity theft. Prosecutors can be expected to threaten to utilize this aggravated identity theft charge (see example here) to induce quick plea agreements from defendants whenever the facts of a case allow for it.Other charges that prosecutors commonly have brought in PPP loan criminal cases include false statements / concealment (18 U.S.C. § 1001), false statements in a loan application (18 U.S.C. § 1014), wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), and related Title 26 tax charges.Stiff Civil Penalties for PPP Loan-Related FIRREA and False Claims Act Civil Cases are EmergingPPP loan enforcement is not limited to criminal prosecutions.

  9. Paycheck Protection Program: An Overview

    Ballard Spahr LLPBrian D. PedrowJanuary 12, 2021

    All required documentation has been submitted, and that the information provided in the application and supporting documents is true and correct. This section includes an acknowledgement that that making a false statement to obtain forgiveness is punishable under the law, including 18 USC 1001 and 2571 by imprisonment for up to five years and a fine up to $250,000; under 15 USC 645 by imprisonment for up to two years and a fine up to $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of up to 30 years and a fine up to $1,000,000.SBA may request additional information for evaluating eligibility the PPP loan and for forgiveness, and that failure to provide such information may result in a determination that the borrower was ineligible for the loan or a denial of the Loan Forgiveness Application.If the borrower checked the box for the FTE Reduction Safe Harbor based on reduced business operation, the borrower must certify that they qualify for the Safe Harbor.The application representations and certifications on Page 2 of the revised Loan Forgiveness Application concludes with the following statement: “The Borrower’s eligibility for loan forgiveness will be evaluated in accordance with the PPP regulations and guidance issued by SBA through the date of this application.

  10. SBA Loan Fraud Defense—How to Defend Against an Indictment

    Oberheiden P.C.Nick OberheidenAugust 28, 2020

    However, many company executives, small business owners, and other individuals are also likely to face allegations of making false statements to the SBA and other federal crimes based solely upon submitting false information in their PPP loan applications. Depending on the specific circumstances involved, individuals targeted in SBA loan fraud investigations during the COVID-19 crisis could face federal charges under statutes including:False Claims Act (31 U.S.C. §§ 3729 – 3733)False Statements to the Government (18 U.S.C. § 1001)Making False Statements to the SBA or an FDIC-Insured Bank—Loan or Credit Applications (18 U.S.C. § 1014)Bank Fraud (18 U.S.C. § 1344)Wire and Mail Fraud (18 U.S.C. § 1343)Aggravated Identity Theft (18 U.S.C. § 1028A)Tax Evasion (26 U.S.C. § 7201)Attempt (18 U.S.C. § 1349)Conspiracy to defraud the United States (18 U.S.C. § 371 and 18 U.S.C. § 1349)Making False, Fictitious or Fraudulent Claims (18 U.S.C. § 287)Misrepresentations to the SBA (15 U.S.C. § 645(d))When targeted in an SBA audit or a federal criminal investigation, it is essential to respond with a comprehensive, cohesive, and proactive defense. This is true whether the audit or investigation is still ongoing, or a criminal complaint has been filed and an indictment is pending.