During the height of the pandemic, the federal government gave out a lot of money to try to help businesses stay afloat. Although these funds were released generously, there were requirements that were supposed to be met when it came to using that money. And now, those who accepted the funds and used them in a way that didn’t comply with the law may be accused of fraud.
For example, federal prosecutors are now aggressively prosecuting cases involving Restaurant Revitalization Funds (“RRF”) grants. These grants were issued to struggling restaurants to keep their doors open by offsetting often significant losses sustained during the pandemic. As they pursue their cases, prosecutors are looking at whether recipients followed the rules regarding the allowable use of RRF funds.
What were the allowable use of RRF funds?
Funds could be used for many specific expenses reasonably necessary to support ongoing business operations. Expenses could include things like payroll, rent, utilities, building and equipment maintenance, supplies, food and beverage supplies, and other business operating expenses. In contrast, owner draws based on profit were not an eligible use of RRF funds. Therefore, it is important to determine whether eligible expenses such as W-2 income and regular and expected guaranteed payments would support an owner’s questioned use of RRF funds.
How prosecutors will assess your case
If prosecutors suspect that you’ve misused RRF funds, then they’re probably going to gain access to your financial and accounting records. Therefore, you want to ensure that you have a justification for every expenditure that involves RRF funds. This can be difficult, especially if you were dealing with large amounts of money during very stressful times.
But if you’re not clear in your justifications, or if witnesses accuse you of fraud, then you could be facing very serious charges. That’s why, if you suspect that you are or you’re going to be under investigation, now is the time to prepare to defend yourself. To learn more about how prosecutors are approaching RRF fraud cases, the next step is to speak to a criminal defense attorney who knowledgeable about RRF and other types of federal fraud investigations.