I'm Facing a PPP or ERC Investigation. What Should I Do?

Federal investigations targeting fraud under the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) program continue to present substantial risks in 2026. The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) are aggressively pursuing cases against individuals and companies suspected of submitting fraudulent PPP loan applications and ERC claims, and the DOJ recently announced multiple prosecutions involving more than $260 million in alleged pandemic-era fraud.

Learn what you need to know if you are facing a PPP or ERC fraud investigation from Virginia criminal tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

Responding to a PPP Fraud or ERC Fraud Investigation in Virginia

Due to the substantial risks involved, responding to a PPP or ERC fraud investigation requires a proactive and strategic approach. Targeted companies and individuals must be prepared to defend themselves effectively, and this starts with understanding their potential liability exposure. With this in mind, when facing a PPP or ERC fraud investigation, it is critical to:

• Locate all relevant documents. Depending on the circumstances, these payments may include PPP loan application materials, payroll records, federal tax returns, and other documentation.
• Implement a litigation hold. Preserving potentially relevant documents is critical to avoid raising red flags and to avoid allegations of destroying evidence during a federal investigation. This includes preserving documents that would otherwise be destroyed in the ordinary course of business.
• Assess the risk of facing PPP or ERC fraud allegations. When facing a federal investigation, it is critical to know the risks involved. In the context of a PPP or ERC fraud investigation, this involves assessing the likelihood that the investigation will lead to civil or criminal fraud allegations.
• Formulate a defense strategy based on the risks at hand. After conducting a comprehensive risk assessment, the next step is to formulate a comprehensive defense strategy. This defense strategy should take into account the realities at hand and focus on achieving a favorable resolution as efficiently as possible.
• Prepare for what could come next. The IRS and DOJ are using search warrants, subpoenas, and various other investigative tools to uncover pandemic-era fraud. As you work to protect yourself (or your company) during the government’s investigation, it will be imperative to ensure that you are prepared for any circumstances that may arise—including federal agents showing up at your door.

These are just the first steps in the process. Facing a PPP or ERC fraud investigation is a complex, high-risk scenario, and it is imperative to make informed, strategic decisions at every step. By engaging experienced defense counsel promptly, corporate executives and other individuals can ensure they make informed, strategic decisions with their (or their company’s) long-term best interests in mind.

Schedule a Call with Virginia Criminal Tax Attorney Kevin E. Thorn Today

If you need help defending against a PPP or ERC fraud investigation, we strongly encourage you to contact us right away. Call 703-752-3752 or contact us online to speak with Virginia criminal tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, in strict confidence as soon as possible.