On September 14, 2026, the U.S. Small Business Administration (SBA) and the U.S. Department of Justice (DOJ) announced suspensions of 870,000 U.S. borrowers tied to an estimated $39 billion in suspected fraud in COVID-era loan programs.
That same day, the DOJ’s National Fraud Enforcement Division reported the results of Operation No Doze, a surge of criminal enforcement actions targeting fraud in the SBA’s small business COVID-era loan programs.
Because borrowers in all industries are at risk, organizational leaders need to understand how the government evaluates alleged infractions and how to prepare for and handle an inquiry.
Epstein Becker Green attorneys Elena M. Quattrone and Thomas J. Jaworski discuss the federal government’s enforcement actions against small business COVID-era loan borrowers.
Key Takeaways
- Breadth of Enforcement: Between June and September 2026, federal prosecutors obtained felony charges against nearly 80 fraud defendants responsible for approximately $100 million in intended loss. The government has also shown up at the doors of small business owners who obtained Paycheck Protection Program (PPP) loans and already repaid them.
- Evaluation and Enforcement Tracks: The government evaluates a COVID-era loan borrower based on the severity of the conduct, the amount of money involved, and whether it believes the borrower intended to defraud the program. Enforcement is split across administrative, civil, and criminal tracks, and criminal investigations can lead to felony indictments, asset forfeiture, restitution, and prison sentences.
- Preparing for an Inquiry: Borrowers should not ignore deadlines in government letters or rush a response. However, they should retain counsel, gather complete documentation, and review the government’s suspected fraud determination against the actual facts, because some borrowers may be wrongly flagged. Anyone with a PPP or other COVID-era loan should get prepared now.
Read more on the SBA’s crackdown on pandemic-era fraud.
Transcript
[00:00:05] Elena Quattrone: Two significant and related events occurred on September 14th. First, the US Small Business Administration, the SBA, and the Department of Justice, announced suspensions of 870,000 U.S. borrowers tied to an estimated $39 billion in suspected fraud in COVID-era loan programs. Secondly, DOJ's National Fraud Enforcement Division, the NFED, reported the results of Operation No Doze, a surge of criminal enforcement actions targeting fraud in SBA's small business COVID-era loan programs.
[00:00:44] Tom Jaworski: The federal government evaluates SBA COVID-19 borrowers, such as those who receive paycheck protection loans or economic injury disaster loans, based on the severity of the conduct, the amount of money involved, and whether the government believes that a borrower intended to defraud the program. Enforcement is split across three main tracks. These are administrative, civil enforcement, and criminal prosecution. Criminal investigations are serious and can lead to felony indictments, asset forfeiture, where the government takes your property, restitution, where you have to pay back the money, and of course, prison sentences.
[00:01:25] Elena Quattrone: During the summer, between June and September, federal prosecutors obtained felony charges against nearly 80 fraud defendants responsible for approximately $100 million in intended loss, and that's just on the criminal side. Additional defendants pled guilty to SBA-related COVID fraud and were sentenced for SBA-related COVID fraud. So we're seeing simultaneous criminal prosecution and civil enforcement through suspensions and issued demand letters.
[00:01:54] Tom Jaworski: Well, unfortunately, borrowers in all industries are at risk, and the themes we've seen include allegations that individuals created businesses, that payroll and revenue records are not accurate, that businesses concealed foreign ties or bribery arrangements. But we've also seen the government prosecute individuals who allegedly fraudulently obtained PPP loans for a few hundred thousand dollars. And we've recently seen the government show up at the doors of small business owners who obtained PPP loans and have already paid them back. So it really runs the gamut on who the government is going after here. The bottom line is that if you obtained a PPP or other COVID-era loan, you should get prepared now.
[00:02:39] Elena Quattrone: Let's first talk about what not to do. Don't ignore it. Missing any deadlines set forth in the letters won't make the inquiry go away. But also, don't rush your response. It's important to retain counsel and gather complete documentation that can be reviewed. So you want to compile all your records related to the loan, the original loan application, and all supporting documents, bank statements showing how funds were used, payroll and tax records, any relevant communications. Then work with counsel to assess your position strategically. The government's suspected fraud determination should be reviewed against the actual facts and backup documentation. Don't assume the government's analysis is correct. We're seeing increased usage of data analytics in government investigations that may be based on algorithmic screening rather than an actual forensic review. So some borrowers may be wrongly flagged.
[00:03:32] Tom Jaworski: And consider consulting with an attorney now, so you're prepared in the event agents show up at your door later.
About Thought Leaders in Health Law
The Thought Leaders in Health Law® video series tracks the latest trends in multiple areas of the health care and life sciences industries, featuring attorneys and advisors from Epstein Becker Green and EBG Advisors. Part of the Epstein Becker Green Insights Network.
