O'Fallon Man Pleads Guilty to PPP Loan Fraud

Summary

A press release published April 29, 2021, announcing that Jason Spengler of O'Fallon, Illinois, pleaded guilty to one count of making a false statement on a federal loan application. According to court documents, the application for a Paycheck Protection Program (PPP) loan did not disclose that Spengler Plumbing Company was in bankruptcy, and the company was awarded a $487,095 PPP loan in April 2020. A quotation from Nancy J. Gargula, U.S. Trustee for Region 10, is included. Sentencing is set for August 18, 2021, and the charge carries a maximum sentence of five years in prison and a fine of up to $250,000.

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Full text

O’Fallon, Ill. – Jason Spengler (45), of O’Fallon, Illinois, pleaded guilty today to one count of
making a false statement on a federal loan application. According to court documents, Spengler
committed the  felony  offense  last  year  when  he  filed  for  assistance  from  the  Paycheck
Protection  Program (“PPP”) without disclosing that his business, Spengler Plumbing Company, was in
bankruptcy.
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted in March 2020 to
provide emergency financial assistance to Americans who were suffering the economic effects caused
by the COVID-19 pandemic. One source of relief provided by the CARES Act was the federal PPP loan
program.  Administered  by  the  Small  Business  Administration  (SBA),  the  program  provided
loans to help qualifying businesses during the COVID-19 crisis.
Debtors in bankruptcy were not eligible for PPP loans. The first question on the loan application
asked,  “Is  the  Applicant  ...  presently  involved  in  any  bankruptcy?”  Above  this
question,  the application explained that the loan would not be approved if the applicant answered
“Yes.”
When Spengler applied for a PPP loan last year, Spengler Plumbing was in bankruptcy. But Spengler
checked “No” on the application, falsely certifying to the lender and the SBA that Spengler
Plumbing was not in bankruptcy. Because of this false statement, Spengler Plumbing was awarded a
$487,095 PPP loan in April 2020.
As a debtor in bankruptcy, Spengler Plumbing was also required by law to obtain prior authorization
from the bankruptcy court before incurring any new unsecured debt. But Spengler applied for the
government loan without notifying the bankruptcy judge, thereby evading the safeguards put in place
by both the SBA and the bankruptcy court.
“Together with U.S. Attorney Steve Weinhoeft and our law enforcement partners, we will continue to
pursue fraud and abuse in bankruptcy cases,” stated Nancy J. Gargula, U.S. Trustee for Region
10. The U.S. Trustee Program is the component of the Justice Department that protects the integrity
of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy
laws. Region 10 is headquartered in Indianapolis, with additional offices in South Bend, Indiana,
and Peoria, Illinois.
Sentencing is set for August 18, 2021, at the federal courthouse in East. St. Louis. The charge
carries
a maximum sentence of five years in prison and a fine of up to $250,000.
This case was referred to the U.S. Attorney’s Office for prosecution by the U.S. Trustee for Region
10, in collaboration with the Southern District of Illinois Bankruptcy Fraud Working Group.
The investigation was conducted by the Small Business Administration – Office of the  Inspector
General. The case is being prosecuted by Assistant United States Attorney Peter T. Reed.

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