Over the course of 2025, the Husch Blackwell Thought Leadership team has closely tracked the Trump administration’s evolving approach to enforcing fraud related to Paycheck Protection Program (PPP) loans. While our companion articles have detailed the latest trends in civil enforcement, including the Department of Justice’s (DOJ) use of the FCA and the role of whistleblowers, this post focuses on the rapidly developing landscape of criminal enforcement. In this article, we analyze recent DOJ charging theories, high-profile prosecutions, and the key risks facing both individuals and entities in the PPP fraud context.
Criminal Enforcement
In less than five years since the PPP loan program was established to combat the financial fallout of the Covid-19 pandemic, and in an even shorter timespan during which loan fraud has been investigated and prosecuted, criminal enforcement trends have already begun to emerge. In particular, the government’s theory of liability for PPP fraud cases has most often been anchored to one of the following charge types: wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), aggravated identity theft (18 U.S.C. § 1028A), and conspiracy to commit fraud (18 U.S.C. § 371). Criminal PPP fraud enforcement has mirrored federal criminal prosecutions more broadly in that many cases are resolved through plea bargains and other pretrial resolutions, and in that the result of a massive percentage of enforcement actions result favors the federal government. This is unsurprising but should put entities on notice that criminal PPP fraud enforcement is alive and well—and often quite effective for the government, while often damaging to the individual and corporate defendants.
Two notable prosecution patterns are worth addressing here. First, many PPP prosecutions in 2025 have targeted groups of defendants, especially “crime rings” of individuals accused of coordinating and conspiring to fraudulently obtain PPP loans for themselves and others and/or to assist others in doing the same. In August 2025, for example, the last of a group of eight individual defendants, all of whom pleaded guilty to charges of wire fraud, was sentenced for defrauding PPP and other COVID-19 disaster relief programs. Specifically, court documents indicate that the defendants submitted loan applications, prepared by a co-defendant and others on behalf of businesses the defendants owned, containing false and fraudulent information about the entities’ number of employees, revenue and average monthly payroll. The defendants then used the resulting funds for unauthorized purposes, including for personal expenses. The defendants’ sentences in this case ranged from 58 months in prison to just 12 months in home detention.
Another trend of interest is the prosecution of those individuals who prepared fraudulent PPP loan applications on behalf of others. Under this theory of liability, DOJ will allege that the preparer, often a tax advisor or other financial professional, caused the federal government to lose funds which were fraudulently gotten through misrepresentation and omissions made on PPP loan applications. In July of this year, for example, an Illinois tax preparer was sentenced to 42 months in prison for his role in fraudulently obtaining over $3 million in PPP and related pandemic relief loans for companies that he knew were not eligible to receive the funds—including some companies that were “non-operational.” Separately, as another example, Chicago-based Byron Taylor pled guilty to PPP fraud as part of a broader prosecution of Taylor’s fraudulent tax preparation conduct. In one example, the loan applications submitted by Taylor indicated that they were being submitted on behalf of borrowers that had earned a certain amount of income that had been reported to the IRS, when in fact, as the tax preparer, Taylor knew that the borrowers had not actually reported the stated income to the IRS. Taylor is scheduled to be sentenced in November 2025 and faces significant imprisonment and other penalties.
More generally, the DOJ’s commitment to prosecuting PPP-related fraud is reflected in several recent criminal cases involving high-profile defendants, including defendants with substantial business interests or conspicuous displays of wealth, often sharing overlapping charges and fact patterns. Rahul Shah, an Illinois IT business owner, was convicted of fraudulently obtaining over $55 million in commercial loans and PPP funds by falsifying bank statements, balance sheets, IRS documents, and using stolen identities. A jury round Shah guilty of bank fraud, false statements to a financial institution, money laundering, and aggravated identity theft, and he faces up to 30 years in prison per count of bank fraud and false statements, up to 10 years in prison per count for money laundering, and up to two years per count for aggravated identity theft. Carl Delano Torjagbo, also known as Karl Lucius Delano, was convicted by a federal jury in Atlanta of bank fraud, wire fraud, and money laundering after obtaining a $9.6 million PPP loan and a $3.4 million IRS tax refund by falsely claiming to operate a large business with hundreds of employees and submitted fake payroll reports and fabricated documents. He then used the proceeds to purchase luxury items including real estate, luxury cars including Lamborghini, BMW, Range Rover, a yacht, and even plastic surgery. He faces up to 170 years in prison.
Other notable examples include Stephanie Hockridge, founder of the lender service provider Blueacorn, who was convicted of conspiracy to commit wire fraud for submitting false PPP loan applications using fabricated income and payroll documents, and now faces up to 20 years in prison. Zvi Zigelman was sentenced to 18 months in prison and ordered to pay $340,000 in restitution after fraudulently obtaining over $2 million in relief loans by submitting false documents and diverting the funds for personal use. Darren Carlyle Sadler faces up to 20 years in federal prison for orchestrating a $14 million PPP fraud scheme involving false loan applications, shell companies, and using funds for luxury purchases such as high-end cars like Rolls Royce and multiple Mercedes-Benzes, designer goods, and expensive dining.
Conclusion and Key Takeaways
Criminal PPP fraud enforcement remains robust and is a top government priority, with the DOJ continuing to obtain significant number of pretrial resolutions and convictions that impose significant penalties on both individuals and entities. As the recent examples in this post show, defendants have been charged with serious felonies such as wire fraud, bank fraud, money laundering, aggravated identity theft, and conspiracy, reflecting patterns of intentional deception, misuse of government relief funds, and efforts to conceal or launder illicit proceeds. The DOJ’s approach underscores that any attempt to exploit pandemic relief programs through false statements, fraudulent documentation, or misuse of funds will face aggressive investigation and prosecution, regardless of the amount involved or the defendant’s status. It is also important to note that some PPP fraud investigations have resulted in joint civil and criminal enforcement, in which defendants face both civil and criminal penalties for the same conduct. As a result, businesses and individuals should proactively review PPP loan representations for accuracy and consult with counsel if potential issues are identified. For more on the civil side of PPP enforcement, see our companion article on FCA enforcement.