Massachusetts Pandemic Loan Fraud Prosecutions: What the Latest EIDL Case Means for Business Owners

The federal government’s investigation and prosecution of pandemic-relief fraud is far from over. A new Massachusetts case involving Lawrence Mayor Brian DePena illustrates the continuing scrutiny of loans issued through federal COVID-19 relief programs and the potentially serious consequences when prosecutors believe those funds were obtained or used improperly.

According to the U.S. Attorney’s Office for the District of Massachusetts, DePena was arrested August 14, 2026, and charged with wire fraud and money laundering. Prosecutors allege that he fraudulently obtained more than $1.5 million in Economic Injury Disaster Loan (EIDL) funds through a Lawrence business and subsequently used portions of the money for personal tax obligations, political campaign expenses and repayment of private mortgages. The charges are allegations, and DePena is presumed innocent unless and until proven guilty in court.

Pandemic Loan Investigations Are Still Active

Although the Paycheck Protection Program (PPP) ended years ago, federal investigators and prosecutors continue to pursue alleged fraud involving PPP, EIDL and other COVID-related financial assistance. Massachusetts has seen a steady stream of these cases.

For example, in June 2026, a Plymouth man was convicted by a federal jury of three counts of wire fraud involving fraudulent PPP applications. Prosecutors alleged that he failed to disclose a prior fraud conviction when applying for PPP loans.

Other Massachusetts cases have involved allegations concerning fabricated financial records, nonexistent businesses, inflated payroll figures, multiple applications and the use of loan proceeds for personal expenses. In one recent case, a Massachusetts State Police retiree received probation, a $5,000 fine, restitution and forfeiture after pleading guilty to obtaining a PPP loan using an allegedly fabricated IRS Schedule C.

These cases demonstrate an important point: the fact that a pandemic loan was approved—or even forgiven—does not necessarily mean that the government has stopped examining the transaction.

What Makes Pandemic Loan Fraud Cases Different?

PPP and EIDL investigations can be unusually complicated because the government may be examining financial records from several years ago and reconstructing exactly what a borrower knew, represented and did with the money.

An investigation may involve loan applications, tax returns, payroll records, bank statements, accounting records, communications with lenders, emails, text messages and the movement of money between business and personal accounts.

The government’s theory may also extend beyond the initial application. Prosecutors could examine whether information submitted to obtain a loan was accurate, whether the borrower was eligible, how the loan proceeds were used and whether subsequent financial transactions were designed to conceal the source or destination of the funds.

That is one reason these cases should not be approached simply as an accounting dispute. Depending upon the circumstances, federal prosecutors may pursue charges including wire fraud, bank fraud, false statements, conspiracy or money laundering. In the current DePena case, for example, prosecutors have charged both wire fraud and money laundering. The DOJ states that wire fraud carries a potential sentence of up to 20 years, while the money-laundering charge carries a potential sentence of up to 10 years, although any actual sentence would depend upon the charges of conviction and the applicable sentencing rules.

An Experienced Defense Can Make a Critical Difference

For someone facing a federal investigation involving PPP or EIDL funds, one of the most important decisions is determining how to respond before the government files charges.

An experienced federal criminal defense attorney can begin by examining the underlying loan application and reconstructing the financial history surrounding the transaction. That may include determining who prepared the application, what information was available to the borrower at the time, what representations were actually made, how eligibility was determined and how the proceeds were ultimately used.

The distinction between an intentional false statement and an error, misunderstanding or accounting mistake can be critically important. Federal fraud prosecutions generally require the government to prove the elements of the charged offense, including the required criminal intent. Simply identifying an inaccurate number or an improper expenditure does not necessarily answer every legal question in a criminal case.

Counsel should also examine the government’s evidence carefully. Bank records and financial transactions can look very different when viewed in isolation than they do when placed in the full context of a business’s finances and the circumstances surrounding the pandemic.

Don’t Wait Until You Are Charged

A pandemic-loan investigation can begin long before a defendant sees an indictment or criminal complaint. A business owner may first learn of an investigation through a subpoena, an interview request, a request for financial records, a contact from an investigator or an inquiry involving a former business associate or accountant.

That is not necessarily the point at which a person should begin trying to explain the case directly to investigators.

Before answering questions or providing additional documents, it can be important to understand what the government is investigating and what information it already possesses. An experienced criminal defense attorney can help assess the situation, protect the client’s rights and develop a strategy based on the actual evidence rather than assumptions about what the government may be looking for.

At Dhar Law we have significant experience defending fraud charges including PPP loans, pandemic-loans and COVID-relief funds. Please contact us at (617) 880-6155 to learn more. 

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