1. Federal Scrutiny of Relief Programs
The aggressive prosecution of pandemic relief fraud has placed thousands of small business owners in the crosshairs of the Department of Justice for alleged misuse of PPP and EIDL funds.
The government established special strike forces to audit these loans. They are using data analytics to find discrepancies between tax returns and loan applications.
We defend against these investigations. We understand that the rules for these programs were constantly changing. We argue that any errors in the application were the result of confusion and the desperate economic conditions of the time rather than a specific intent to defraud the government.
PPP Loan Fraud Allegations
The Paycheck Protection Program offered forgivable loans to cover payroll. Prosecutors allege fraud when owners used the funds for non payroll expenses or inflated their employee count.
We defend these cases by analyzing the use of funds. We argue that money is fungible. If an owner used PPP funds to pay rent but used other business revenue to pay payroll they still honored the spirit of the law. We also litigate the necessity certification. We argue that the business faced genuine uncertainty which justified the loan request. We aim to show that the business was a legitimate entity fighting for survival not a shell company created to steal.
EIDL and SBA Loan Fraud
The Economic Injury Disaster Loan program provided working capital. The government targets owners who used these funds to buy personal assets or to refinance personal debt.
We scrutinize the loan agreement terms. We often find that the restrictions on the use of funds were vague. We present evidence that the owner invested the money back into the business operations. If the business ultimately failed and defaulted on the loan we argue that bankruptcy is not a crime. We distinguish between a bad business investment and a criminal scheme.
2. Internal Theft and Embezzlement
When the threat comes from inside the company in the form of employee embezzlement or vendor fraud it requires an immediate internal investigation to stop the bleeding and gather evidence for prosecution. Small businesses are particularly vulnerable because they often lack the internal controls of large corporations. A single trusted bookkeeper often controls the entire financial life of the company.
We represent companies in uncovering these crimes. We do not just fire the employee. We build a case to recover the assets.
Payroll Fraud and Ghost Employees
Employees with access to the payroll system may create ghost employees or inflate their own hours and bonuses. This is common in businesses with remote workers or high turnover.
We conduct a forensic payroll audit. We cross reference the payroll list with the active employee roster. We trace the bank account numbers to see if multiple paychecks are going to the same account controlled by the fraudster. We use this evidence to file civil lawsuits for conversion and to support criminal referrals to local law enforcement. We help the business implement dual control systems to prevent recurrence.
Vendor Fraud and Kickbacks
Purchasing managers may collude with vendors to approve inflated invoices in exchange for a kickback. Or they may set up a shell company to bill their own employer for non existent services.
We analyze the vendor master file. We look for vendors with addresses that match employee home addresses. We compare invoice prices to market rates. We argue that the employee breached their fiduciary duty. We seek restitution not just for the stolen funds but for the cost of the investigation. We send a message that the company will not tolerate theft.
3. Tax Evasion and Employment Tax Fraud
The Internal Revenue Service aggressively targets small businesses for the failure to withhold and pay over employment taxes which they view as theft from the employees and the Treasury.
This is known as the Trust Fund Recovery Penalty. It allows the IRS to pierce the corporate veil and seize the personal assets of the owners.
We defend business owners against these civil and criminal tax assessments. We understand that businesses often prioritize paying vendors to keep the lights on during a cash crunch.
Cash Skimming and Unreported Income
Cash intensive businesses like restaurants and retail stores are frequently audited for skimming. The IRS uses statistical models to guess what the income should have been.
We challenge these indirect methods of proof. We argue that the statistical models do not account for the specific waste or discount policies of the business. We present the daily sales logs and the inventory records to prove that the reported income is accurate. We fight to keep the audit in the civil division and prevent it from being referred to the Criminal Investigation division.
Trust Fund Recovery Penalties
If a business fails to pay payroll taxes the IRS can assess 100 percent of the tax against the responsible person. This puts the home and retirement of the owner at risk.
We litigate the definition of a responsible person. We argue that our client was a passive investor or a junior manager who followed orders and did not have the willful intent to evade the tax. We negotiate installment agreements and offers in compromise to resolve the liability without criminal charges. We work to save the personal financial future of the client.
4. Why Clients Choose SJKP LLP for Small Business Fraud
We combine the forensic precision of a specialized accounting firm with the aggressive litigation tactics of a federal criminal defense practice to protect the backbone of the American economy.
At SJKP LLP we do not view small business fraud allegations as administrative headaches. We view them as existential threats to your hard work.
Our firm is chosen because we understand the numbers. We can read a balance sheet better than the FBI agents investigating you. We know how to prove that a loan application was made in good faith. We have the resources to track down the assets stolen by a dishonest partner.
We act with urgency. We intervene before the indictment is filed to explain the context of the business decisions. We negotiate with the government to view you as a taxpayer trying to survive a crisis rather than a criminal trying to cheat the system. Whether you are fighting a federal audit or fighting to recover your stolen capital SJKP LLP provides the sophisticated and unwavering advocacy necessary to keep you in business.
09 Jan, 2026
