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EIDL Fraud Attorney | San Diego & Federal Cases Nationwide

The COVID-19 Economic Injury Disaster Loan (EIDL) program moved billions of dollars to small businesses quickly. Years later, federal prosecutors are still reviewing those loans, and Congress has given them 10 years to bring fraud charges. Many business owners are now being questioned about statements in their applications, the number of employees or revenue they reported, related entities, or how the money was spent.

Vikas Bajaj represents borrowers and business owners in EIDL and EIDL-advance investigations. Related guides: can you go to jail for SBA loan fraud and bank and loan fraud charges.

What Is the EIDL Program? 15 U.S.C. § 636(b)

Economic Injury Disaster Loans are SBA disaster loans authorized by section 7(b) of the Small Business Act, 15 U.S.C. § 636(b). In the CARES Act, Congress expanded eligibility for these loans during a “covered period” that began on January 31, 2020 and ended on December 31, 2021 (15 U.S.C. § 9009). The CARES Act also created EIDL advances (§ 9009(e)), and a later law created targeted EIDL advances (15 U.S.C. § 9009b).

PPP loans were made by private lenders under section 7(a) of the Small Business Act and guaranteed by the SBA (15 U.S.C. § 636(a)(36)). EIDL loans are SBA disaster loans under section 7(b), which the SBA is authorized to make directly. That difference can affect which statutes prosecutors use.

The 10-Year Statute of Limitations for EIDL Fraud

Most federal crimes have a five-year statute of limitations (18 U.S.C. § 3282). On August 5, 2022, the COVID-19 EIDL Fraud Statute of Limitations Act of 2022 (Public Law 117-165) extended the period for EIDL borrower fraud to 10 years. It added a paragraph (16) to 15 U.S.C. § 636(b) (Congress has enacted two paragraphs with that number), which reads, as codified:

“Notwithstanding any other provision of law, any criminal charge or civil enforcement action alleging that a borrower engaged in fraud with respect to a loan made under this subsection in response to COVID–19 during the covered period (as defined in section 9009(a) of this title) shall be filed not later than 10 years after the offense was committed.”

The same law added parallel 10-year provisions for fraud “with respect to the use of an advance” under the EIDL advance program (15 U.S.C. § 9009(e)(9)) and for fraud “with respect to the use of any amount received” under the targeted EIDL advance program (15 U.S.C. § 9009b(i)).

A companion law signed the same day, the PPP and Bank Fraud Enforcement Harmonization Act of 2022 (Public Law 117-166), set the same 10-year period for PPP borrower fraud. In practical terms, conduct connected to a 2020 or 2021 EIDL application or advance may remain chargeable into 2030 or 2031. The 2022 laws do not contain an express retroactivity clause, but because no 2020–2021 loan’s original five-year period had expired when they took effect on August 5, 2022, the 10-year period generally reaches those loans (extending a period that has not yet run is permitted: Stogner v. California, 539 U.S. 607 (2003)). The provisions reach charges and civil actions alleging that a borrower committed fraud; whether they apply to someone else, such as a preparer, is untested, and whether they apply to a particular charge is a legal question. They do not cover the Shuttered Venue Operators Grant, the Restaurant Revitalization Fund, or pandemic unemployment benefits.

Federal Charges Common in EIDL Cases

  • False statements to the SBA, 18 U.S.C. § 1014: knowingly making a false statement to influence the SBA on a loan application. Up to 30 years and $1,000,000. After Thompson v. United States (2025), the statement must be false, not merely misleading.
  • Wire fraud, 18 U.S.C. § 1343: online applications and electronic disbursements supply the interstate wire. Up to 20 years, or 30 years if the violation involves benefits paid in connection with a presidentially declared major disaster or emergency or affects a financial institution. See mail and wire fraud.
  • Theft of government funds, 18 U.S.C. § 641: knowingly converting money of the United States. Up to 10 years (one year if the value is $1,000 or less).
  • False statements, 18 U.S.C. § 1001: including statements to agents during the investigation. See § 1001 defense.
  • Money laundering, 18 U.S.C. § 1957: monetary transactions over $10,000 in proceeds of specified unlawful activity. See § 1957 defense.
  • Aggravated identity theft, 18 U.S.C. § 1028A: a mandatory two-year term, consecutive to the sentence for the underlying felony, when another person’s means of identification is knowingly used without lawful authority during and in relation to an enumerated felony and, after Dubin v. United States, 599 U.S. 110 (2023), only when that use is at the crux of what makes the conduct criminal. See identity theft defense.

How SBA and Federal Agencies Build EIDL Fraud Cases

EIDL cases are prosecuted by the local U.S. Attorney’s Office. In one EIDL and PPP case, the FBI, IRS Criminal Investigation, the SBA Office of Inspector General and the Federal Housing Finance Agency Office of Inspector General investigated, according to a Department of Justice release dated November 16, 2021 on the sentencing of Richard Ayvazyan and co-defendants in the Central District of California. For how these cases are charged and heard in San Diego, see how federal cases move through the Southern District of California.

Common triggers include:

  • Revenue, cost-of-goods, or employee figures that do not match tax filings
  • Applications for businesses that did not exist or were not operating on January 31, 2020
  • Multiple applications from related people or entities, or shared addresses and bank accounts
  • Loan proceeds spent on personal items rather than business expenses
  • Use of preparers or “consultants” who submitted many similar applications
  • Identity discrepancies

Many matters begin as SBA reviews, collection actions, or bank inquiries and later turn into criminal referrals. Some people first learn of a case through a target letter or grand jury subpoena.

Federal Cases Nationwide

EIDL cases are investigated and charged in districts across the country, and the agents and Department of Justice prosecutors on a case may be far from where the borrower lives or the business operated. Early contact is the same work in any district: counsel can reach the case agents and the Department of Justice prosecutors handling the matter, learn what can be learned about the borrower’s status, and address SBA reviews, subpoenas, target letters, and interview requests before a charging decision is made.

How We Defend EIDL Loan Fraud Cases

Lack of Criminal Intent

Fraud requires intent. Many applicants relied on confusing guidance that changed repeatedly, estimated figures in good faith, or made bookkeeping errors.

False vs. Misleading Statements

Under Thompson, a § 1014 charge requires a statement that was actually false. Ambiguous application questions and literally true answers are important to examine.

Reliance on Preparers and Advisors

If an accountant, consultant, or preparer filled out or submitted the application, what you knew and what they did becomes central.

Use of Funds

Whether a particular expense was a permitted use under the loan agreement and SBA rules, and what the borrower understood those rules to be, is often contested.

Identity and Third-Party Misuse

Some people are implicated because someone else used their name, Social Security number, or business information.

Constitutional and Procedural Issues

Searches, subpoenas, interviews, and the limitation period itself are reviewed for defects.

Why Early Intervention Matters

Early counsel can learn which agency is involved, prevent statements that become evidence, assemble records that explain the application, and, when appropriate, address repayment or present information to the prosecutor before a charging decision. Related reading: what to expect in an EIDL investigation, red flags in EIDL audits, and can you go to jail for SBA loan fraud?.

Consequences of EIDL Loan Fraud Charges

  • Federal imprisonment, up to the statutory maximums above
  • Fines, restitution to the SBA, and forfeiture
  • Supervised release after any prison term
  • Debarment from federal programs and collateral business consequences
  • Immigration consequences for non-citizens

Actual sentences depend on the statute of conviction, the loss amount under the Sentencing Guidelines, and the individual facts.

What EIDL borrowers certify

Before a loan is approved, every borrower must certify that the loan conditions are met. Those certifications include that the funds will be used solely for the business purposes specified, such as payroll, rent and utilities, and that all documents and forms are valid and up to date when the application is made.

Frequently Asked Questions (FAQs)

Q: What is the statute of limitations for EIDL fraud?

A: Ten years. The COVID-19 EIDL Fraud Statute of Limitations Act of 2022 added 15 U.S.C. § 636(b)(16), which requires any criminal charge or civil enforcement action alleging borrower fraud on a COVID-19 EIDL loan made during the covered period to be filed within 10 years after the offense was committed. Parallel 10-year provisions cover fraud with respect to the use of EIDL advances and targeted advances (15 U.S.C. §§ 9009(e)(9), 9009b(i)).

Q: What law authorizes EIDL loans?

A: Section 7(b) of the Small Business Act, 15 U.S.C. § 636(b), as expanded for the COVID-19 covered period (January 31, 2020 to December 31, 2021) by the CARES Act, 15 U.S.C. § 9009.

Q: What charges are common in EIDL fraud cases?

A: False statements to the SBA (18 U.S.C. § 1014), wire fraud (§ 1343), theft of government funds (§ 641), false statements to agents (§ 1001), and sometimes money laundering or aggravated identity theft.

Q: Can I be prosecuted for an honest mistake on my EIDL application?

A: An honest mistake is not fraud, because the statutes require knowledge and intent. But mistakes can trigger investigations, and explanations given to agents without counsel can become evidence.

Q: Who investigates EIDL fraud?

A: Federal agents investigate these cases. In the EIDL and PPP case against Richard Ayvazyan and others, the FBI, IRS Criminal Investigation and the SBA Office of Inspector General investigated (Department of Justice release, November 16, 2021). In San Diego and Imperial Counties, cases are prosecuted by the U.S. Attorney’s Office for the Southern District of California.

Q: Does repaying the loan end the investigation?

A: Not necessarily. Repayment can matter to prosecutors and at sentencing, but it does not erase a completed offense. Talk to counsel before making repayment decisions in connection with an investigation.

What penalties apply to a false statement on an EIDL application?

A false statement to influence the SBA can be charged under 18 U.S.C. § 1014, punishable by up to 30 years and a fine of up to $1,000,000. Wire fraud under § 1343 carries up to 20 years.

Is EDD unemployment fraud handled the same way?

No. EDD cases usually involve California’s Unemployment Insurance Code and Penal Code and are prosecuted in state court. EIDL cases are federal. See the healthcare fraud page for EDD questions.

Early Action Is Your Strongest Legal Defense Strategy

If you have been contacted about an EIDL loan or advance, contact the Law Office of Vikas Bajaj, APC before you respond. Call (619) 525-7005 or request a confidential consultation.

This page is attorney advertising and general information, not legal advice. Every case turns on its own facts.