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Received a Federal Target Letter for PPP or EIDL Loan Fraud in Los Angeles? What You Need to Do Next

By Los Angeles Criminal Defense Attorney on September 21, 2026

Receiving a PPP fraud target letter or EIDL fraud target letter is fundamentally different from learning that the Small Business Administration is reviewing a pandemic-era loan. A target letter signals that a federal criminal investigation has progressed to a much more serious stage. At this point, prosecutors may already view you as a potential defendant.

If you received a federal target, it is a time to speak with an experienced federal criminal defense attorney! The Los Angeles Covid loan fraud defense lawyers at Werksman Jackson Quinn & Mason LLP can and develop a pre-indictment strategy and provide aggressive legal defense if necessary.

What Does a Federal Target Letter Mean?

The U.S. Department of Justice distinguishes between a subject and a target of a grand jury investigation. A subject is someone whose conduct falls within the scope of the investigation. A target is a person whom prosecutors believe may have committed a crime and who could potentially face criminal charges.

Receiving a target letter means prosecutors are not simply gathering background information about you. They believe evidence connects you to potential criminal conduct and they are already considering prosecution.

DOJ policy provides warnings to targets concerning their rights:

• Your conduct is being investigated for possible violations of federal criminal law
• You may refuse to answer a question if a truthful response could tend to incriminate you.
• Anything you say may be used against you by the grand jury or in a later legal proceeding.

Why PPP and EIDL Target Letters Require Immediate Attention

A target letter does not mean you have been convicted, or even indicted. But it should be treated as a serious warning that filing criminal charges may be under consideration.

 

Federal authorities have spent years investigating suspected fraud involving pandemic-relief programs, including the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EDL) program. These investigations can involve loan applications, payroll information, tax records, bank statements, business ownership records, certifications regarding the use of proceeds, and transactions occurring after loan funds were received.

A PPP loan fraud investigation or an EIDL loan fraud investigation may focus on allegations such as:

• Inflating payroll or employee numbers
• Misrepresenting business revenue
• Applying through nonexistent or inactive businesses
• Submitting altered tax or payroll documentation
• Obtaining multiple loans through related entities
• Making false statements in loan applications
• Misrepresenting how loan proceeds were used
• Using another person’s identity or business information
• Participating in a conspiracy involving multiple applicants

Investigators may also examine where loan proceeds went after disbursement. Federal grand juries can compel testimony and documents, and DOJ guidance recognizes the use of grand jury investigations to trace suspected criminal proceeds, transfers, assets, and potential money laundering transactions.

The Importance of Pre-Indictment Defense

Pre-indictment defense occurs while the government is still investigating and before a grand jury returns an indictment. When handled effectively, it allows defense counsel to begin addressing the government’s case before the client is formally placed in the position of defending criminal charges in court.

A federal PPP fraud defense attorney can contact the Assistant U.S. Attorney handling the investigation and attempt to determine its scope. Depending on the circumstances and what prosecutors are willing to disclose, counsel may seek to learn which transactions or applications are at issue, what statutes the government appears to be considering, and what conduct prosecutors believe was fraudulent.

That information can help the defense identify weaknesses in the government’s apparent theory. For example, what prosecutors initially view as a knowingly false representation could have resulted from:

• Confusing program requirements
• Information supplied by an accountant or preparer
• Bookkeeping mistakes
• Rapidly changing guidance information
• A legitimate interpretation of the applicant’s financial records

Preserve Records That May Help Your Defense

One of the first steps after receiving an EIDL or PPP fraud target letter should be identifying and preserving potentially relevant evidence. Do not destroy, alter, or conceal records. Instead, work with counsel to preserve materials that may establish what actually happened.

Potentially important evidence can include:

• Loan applications
• Emails
• Text messages
• Payroll records
• Tax filings
• Bank statements
• Accounting records
• Employee information
• Communications with lenders
• Communications with accountants, consultants, or loan preparers
• Records showing how funds were spent may also become important.

Defense counsel will look for context that may be missing from the prosecution’s evidence, such as records that undermine an inference of fraudulent intent.

How an Attorney Can Help

Once retained, defense counsel can begin developing a strategy rather than simply waiting to see whether an indictment arrives.

That work may include communicating directly with the Assistant U.S. Attorney, identifying the agencies involved, determining the apparent scope of the investigation, examining relevant loan files, reconstructing financial transactions, preserving favorable evidence, interviewing witnesses when appropriate, and analyzing possible criminal statutes and defenses.

Counsel can also evaluate whether the government’s evidence actually proves criminal intent. Prosecutors must prove the mental state required by the particular offense charged, making the circumstances surrounding disputed statements and transactions highly significant. A lawyer may also identify issues the government has overlooked or evidence that substantially changes the context of a transaction.

Speak With an Experienced Covid Loan Fraud Defense Attorney  

If you have received a PPP fraud target letter, EIDL fraud target letter, or another notice indicating that you are the target of a federal COVID-relief investigation, Werksman Jackson Quinn & Mason LLP can help you assess the situation before charges are filed.

Werksman Jackson & Quinn LLP is one of the most highly esteemed criminal defense firms in the nation. Our legal team includes former Deputy District Attorneys and former federal prosecutors who understand how government investigations work.

We offer free consultations to people who are facing investigations and criminal charges.

Call (213) 688-0460 to learn more today.

FAQs About Receiving a PPP or EIDL Fraud Target Letter

What does it mean if I receive a federal target letter for PPP or EIDL loan fraud?

A federal target letter generally means prosecutors believe they have substantial evidence linking you to possible criminal conduct and consider you a potential defendant. It is more serious than simply being contacted as a witness or learning that your PPP or EIDL loan is under review.

Does receiving a PPP fraud target letter mean I will be indicted?

A PPP fraud target letter indicates that you are under serious investigation, but an indictment is not automatic. The pre-indictment period may give a federal defense attorney an opportunity to communicate with prosecutors, assess the government’s theory, preserve favorable evidence, and determine whether a strategic response is appropriate.

What should I do immediately after receiving an EIDL fraud target letter?

Do not contact federal investigators or prosecutors on your own to explain what happened. Preserve loan applications, bank statements, tax documents, payroll records, emails, text messages, and other potentially relevant evidence, and speak with an experienced federal criminal defense attorney before making statements or providing additional information.