In investigating PPP loan fraud, the government first looks at the application itself.  How many employees does the company have?  Does that number match their payroll tax filings?  Are the 941‘s the same as what is on file at the IRS?  Has the owner(s) been convicted of or pled guilty to a felony with the past 5 years?  Do the bank statements submitted on the PPP loan application match the actual bank statements? Are there business expenses on the bank statements?  Was the bank account in a business checking account? When was the entity created?  Did the company apply for more than one loan?  Does the individual owner have multiple entities and apply for multiple loans?  Any inaccurate statements on the application can result in a charge under Under 18 U.S.C. § 1344 (bank fraud) – making false statements to an FDIC-insured financial institution, or making false statements to the SBA.  In addition, the CARES Act also has requirements for how companies use, and account for the use of, PPP loan funds.  Some of the more outrageous PPP loan fraud prosecutions have resulted due to individuals buying Range Rovers, Lamborghinis and rolex watches with PPP loan proeeeds, i.e. converting PPP loan funds for personal use.  Also, when seeking forgiveness for loans, companies must be very careful in what they submit.  Any false documentation submitted can result in prosecution.

So, should the government be inquiring about your PPP loan(s) or EIDL loans or any disaster relief funds, it is important to contact us immediately.  Being evasive or being unable to produce documentation of PPP Compliance will only increase issues that you will be facing.  Allow Conaway & Strickler, PC to help you with expert advice from experienced federal counsel. We are very familiar with the federal criminal investigative process with the SBA-OIG, IRS and the DOJ.

Conaway & Strickler, PC handles PPP loans nationwide. Meg Strickler has 25 plus years experience fighting federal criminal cases in the district courts across the country.

What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a document that financial institutions are legally required to file with the Financial Crimes Enforcement Network (FinCEN) when they detect potentially suspicious behavior involving financial transactions. Once filed, these reports are sent to FinCEN, a division of the U.S. Department of the Treasury, which shares the information with law enforcement agencies for further investigation if necessary.

Why Do Banks File SARs?

Banks must comply with a variety of regulations designed to prevent financial crimes. One of the core elements of these regulations is monitoring customer transactions for anything that might indicate illegal or suspicious activity. A SAR is typically filed when a bank suspects that a transaction, or series of transactions, might involve:

• Money laundering: Attempting to disguise the origins of illegally obtained money by passing it through a legitimate banking system.
• Fraud: Including wire fraud, identity theft, and other deceptive financial activities.
• Structuring: Breaking down large sums of money into smaller deposits to avoid triggering reporting requirements (also known as “smurfing”).
• Unexplained large transactions: Transactions that don’t align with an individual’s or business’s typical activity or appear inconsistent with known financial patterns.

Common Triggers for SARs

Financial institutions are trained to spot red flags, and there are a number of scenarios that could trigger a SAR filing. Here are some of the most common:

1. Unusually Large Transactions: If an individual or business is suddenly moving unusually large amounts of money, especially in cash, this can raise red flags. Large deposits, withdrawals, or transfers that don’t align with normal activity patterns may prompt the bank to investigate further.
2. Frequent Cash Deposits Below $10,000: To avoid the $10,000 threshold that triggers an automatic Currency Transaction Report (CTR), some individuals break down larger sums into smaller deposits (a practice called structuring). If a bank detects this behavior, it will likely file a SAR.
3. Wire Transfers to High-Risk Countries: International wire transfers to or from countries that are known for terrorist activity, money laundering, or lacking robust financial regulations may result in a SAR filing.
4. Multiple Accounts Under One Name: Using multiple accounts to shuffle money back and forth—especially if the accounts seem unrelated to legitimate business or personal activities—can appear suspicious.
5. Account Activity Inconsistent with Known Business Practices: If a company typically processes small, regular transactions and suddenly starts handling large, irregular amounts, it might trigger suspicion. Likewise, if a personal account shows business-level activity, this could raise alarms.
6. Use of Shell Companies: Banks scrutinize accounts associated with shell companies that lack a clear purpose or business activity, as they are often used in money laundering schemes.
7. Unexplained Source of Funds: If the origin of deposited funds is unclear, or if large amounts of money are transferred without any legitimate explanation, the bank may file a SAR.

The Impact of a SAR Filing

When a bank files a SAR, it is confidential. The individual or business subject to the report is not directly informed; However, the bank may decide to take action based on its findings, which can include:

• Account closures: If the bank believes the activity is risky or potentially illegal, it may close your account or freeze any available funds.
• Increased monitoring: Your account may come under closer scrutiny, with more restrictions placed on transactions.
• Law enforcement involvement: If the behavior in question warrants it, the SAR could lead to a broader investigation by federal or state law enforcement agencies.

What to Do if You Believe a SAR Has Been Filed Against You

While you won’t be directly informed if a SAR has been filed, you may suspect something is amiss if your bank account is frozen, closed, or you’re contacted by law enforcement regarding your financial activity. If you find yourself in this situation, here are some steps to take:

1. Seek Legal Counsel: The most important thing you can do is consult with an experienced criminal defense attorney. A SAR filing could be the beginning of a serious investigation, and you’ll want legal guidance to protect your rights and interests.
2. Gather Financial Records: Be prepared to provide your attorney with all relevant financial records. This can help explain the nature of your transactions and demonstrate that they are legitimate.
3. Do Not Attempt to Explain Yourself to the Bank: Anything you say to the bank could be misinterpreted or used against you in a later investigation. Your attorney will be able to navigate these communications appropriately.

A Suspicious Activity Report can be a precursor to serious legal trouble, but it’s important to remember that it is not an accusation of a crime. Banks are required to report anything that appears suspicious, even if the behavior is ultimately lawful. If you find yourself facing consequences related to an SAR filing, don’t wait—contact us today for a consultation and take control of your situation before it escalates. If you are facing financial crime allegations, our skilled team of criminal defense attorneys is here to help.

What is the “Free Money Hack”?

The trend usually involves TikTok users claiming they have found ways to manipulate the financial system, offering viewers methods to “hack” or exploit bank accounts, cash apps, or credit systems to obtain free money. Some of these schemes involve:

• Overdraft exploits: Encouraging users to overdraw bank accounts and then supposedly avoid the consequences.
• Fake check schemes: Depositing fraudulent checks into accounts and withdrawing the funds before the bank detects the fraud.
• Refund fraud: Filing fake claims with companies to get refunds for purchases that were never made.

These tactics promise fast cash with minimal effort, but what they really deliver is financial and legal disaster.

Why Following the Trend is Illegal

What these TikTok videos don’t explain is the serious legal consequences of participating in such schemes. Fraud, theft, and exploiting banking systems for personal gain are criminal acts, regardless of how trendy or harmless they may seem in a 60-second clip.

Here are some common legal charges that can result from participating in these activities:

1. Bank Fraud: This is a federal crime that can result in hefty fines and imprisonment. Intentionally defrauding a financial institution is illegal under U.S. law, and following these TikTok hacks can quickly escalate into a federal investigation.
2. Wire Fraud: Many of these hacks involve electronic transfers or communications, which falls under wire fraud. This also carries severe penalties, including long prison sentences.
3. Check Fraud: Depositing fake or altered checks with the intent to withdraw funds is considered check fraud. Even if you think you’re being clever by pulling out the money before the bank catches on, it’s still a criminal act.
4. Identity Theft: Some of these schemes suggest using fake names or other people’s banking details, which could lead to identity theft charges. This is a serious offense with strict penalties.
5. Theft by Deception: If you knowingly mislead a financial institution or another individual to gain money or assets, this is classified as theft by deception. Penalties can include jail time and significant fines.

Participating in these “hacks” isn’t just risky from a financial perspective—it’s a direct pathway to legal repercussions that can follow you for the rest of your life. Depending on the scale of the fraud or theft, you could face:

• Criminal Charges: These could range from misdemeanors to felonies, depending on the amount of money involved and the nature of the crime.
• Restitution: If convicted, you could be required to pay back any money that was wrongfully obtained, along with additional penalties.
• Permanent Criminal Record: A fraud conviction can make it difficult to secure future employment, housing, or loans, and can damage your reputation permanently.

The allure of easy money is tempting, but it’s important to remember that many social media trends, like the “free money hack,” come with significant risks. Engaging in these activities can lead to criminal charges that affect your financial future and personal freedom. Before following any advice from TikTok or other social media platforms, it’s vital to understand the full legal ramifications.

If you’ve been accused of fraud or any criminal activity related to online schemes, our experienced legal team is here to help. Don’t hesitate to contact us today for a free consultation. The legal system can be complex and unforgiving, but with the right defense, you can navigate the process and work toward the best possible outcome