Federal prosecutors in Brooklyn say a company called Lafayette tapped into COVID-era Paycheck Protection Program funds it should not have received, according to a post from the U.S. Attorney’s Office for the Eastern District of New York. The office quoted U.S. Attorney Joseph Nocella Jr. as saying Congress created the PPP to keep eligible small businesses afloat and that Lafayette “applied for and took government money to which they were not entitled.” The public statement did not say whether any charges have been filed and noted only that investigators will keep digging.
“Unfortunately, Lafayette applied for and took government money to which they were not entitled. Our Office will continue to investigate and hold companies accountable who took advantage of pandemic relief programs.” — US Attorney EDNY (@EDNYnews) May 7, 2026
What prosecutors posted
The statement appeared on the official X account for the U.S. Attorney’s Office for the Eastern District of New York and quotes prosecutors accusing Lafayette of improperly applying for and accepting PPP funds. In a post from the U.S. Attorney’s Office for the Eastern District of New York, the office stressed that the PPP was meant for qualifying small businesses and warned that reviews of suspicious applications are still very much active. The post did not attach any court documents or spell out a particular criminal count, leaving open what, if any, formal case might follow.
DOJ’s wider push on pandemic relief fraud
The EDNY message lands in the middle of a broader, stepped-up federal crackdown on suspected abuse of pandemic relief programs. A recent Department of Justice press release describes multi-district cases and the creation of a National Fraud Enforcement Division to coordinate investigations into PPP and related scams. Across the country, prosecutors have pursued both criminal charges and civil actions in matters involving allegedly falsified applications, padded payroll numbers, and shell companies created to siphon off relief money.
Possible legal exposure for borrowers
Legal advisers caution that borrowers who knowingly lie about eligibility or payroll details on PPP forms can be looking at more than just a stern letter. They can be sued under the False Claims Act and also face criminal counts for false statements, bank fraud, wire fraud, or similar offenses. Guidance from law firms and watchdog groups has repeatedly flagged the PPP’s “economic necessity” certification and representations made to lenders as prime enforcement targets. Cooley LLP and other analysts have pointed to statutes such as 18 U.S.C. §§ 1014 and 1001 and the False Claims Act as common tools in PPP-related cases. Outcomes in these matters can range from repayment demands and civil settlements to full-blown criminal indictments, depending on what investigators can prove.
What’s likely to happen next
According to the EDNY post, federal investigators will continue combing through Lafayette’s PPP application and related records. The U.S. Attorney’s Office in Brooklyn has been highlighting pandemic-relief enforcement under Joseph Nocella Jr.’s leadership, and the U.S. Attorney’s Office for the Eastern District of New York provides background on Nocella and the office’s stated priorities. If prosecutors ultimately conclude that Lafayette intentionally misrepresented facts or engaged in fraud, the company could be pressed to return PPP funds, sued under the False Claims Act, or charged criminally. Depending on what the evidence shows, the office could also opt for a negotiated settlement or an administrative recovery instead of going to court.
