30 PPP Fraud Prosecutions So Far, and Counting

Posted On Aug 13, 2020 By admin With Comments Off

Department of Justice - PPP loan fraud small businesses

Paycheck Protection Program( PPP) credits have aided more than 5 million small business owners, affording a much needed lifeline during the Coronavirus outbreak crisis. The overwhelming majority of business owners are legitimate and will use the money as intended to retain employees and remain operational.

But the PPP program has attracted a few rotten apples. And you won’t believe how smells they are.

To date, the Justice Department has entered 30 PPP fraud cases. Defendants are charged against bilking taxpayers out of tens of millions of dollars. Luckily, the Feds have recovered a large part of the lend proceeds already.

And what’s been recovered tells a mad tale.

Feds have grabbed a 2020 Lamborghini Huracan sports car, a Rolex Presidential watch, a 5.73 -carat diamond echo, and a diamond bracelet — all purchased with PPP loan money. Other loot includes a Tesla, a 26 -foot Pavati Wake Boat, two Rolls-Royces, a Lamborghini Urus, and a Ford F-3 50 pickup truck.

Authorities too impounded money accumulations, froze bank account, and recovered other assets.

Some defendants blew taxpayer money on mad expend sprees, including Las Vegas gambling, visits to strip guilds, and day-trading. In one case, a married couple was apprehended at JFK Airport purportedly attempting to flee the country after submitting 18 sham applications.

Every government program attracts a small number of grifters and felons. And the DOJ has stimulated it national priorities to spring them out. On March 16, 2020, Attorney General William Barr directed all 94 U.S. Attorneys’ Positions to prioritize investigating and prosecuting PPP loan fraud cases.

PPP Loan Program Results

On March 27, 2020 Congress legislated and President Trump signed into principle the Coronavirus Aid, Relief, and Economic Security Act — or CARES Act. It sanctioned the Paycheck Protection Program. PPP is a low-interest, excusable loan curriculum designed to help small businesses and self-employed individuals.

In an odd instance of government rush, the Small Business Administration started countenancing lend works precisely a week later on April 3, 2020. Through July 24, the SBA has approved 5,005, 261 lends, constituting $519,505, 881,228, supporting its success.

The majority of the funds are going to help the nation’s 31 million small businesses, there’s no doubt about it. The number of fraud trials is very small by comparison.

30 PPP Fraud Cases- So Far

Could these trials involve good-for-nothing more than paperwork mistakes? They is not appear to be honest mistakes. All appear to involve horrific environments — acquiring the government eventually proves the facts. Some accuseds actually were under indictment for other accusations at the time of applying for lends. Others secreted their criminal past.

Here’s a summary of the 30 PPP loan fraud cases to date with some of the lurid items alleged 😛 TAGEND

Two Humen, Identity Theft and a Conspiracy( Rhode Island- May 5)

David A. Staveley, aka Kurt D. Sanborn, and David Butziger were charged with conspiring to seek over $530,000 in PPP money. It’s alleged they falsely claimed to have dozens of hires at 4 different industries, including a diner neither owned. They allegedly discussed their fraud in email and one presumed the identity of his own brother. Special Agent in Charge Joseph R. Bonavolonta of the FBI’s Boston Field Office said in a statement,” Thankfully we were able to stop them before taxpayers were victimized .”

Texas Engineer( Texas- May 13)

Shashank Rai, an designer from Beaumont, is charged with multiple weighs of fraud and false evidences to the SBA for seeking more than $ 10 million in PPP monies. He supposedly claimed to have 250 works when there is no record of any in his business, Rai Family LLC. Court papers allege that handwritten greenbacks recovered from his junk describe how he planned to use$ 3 million of the money for personal assets.

Reality TV Personality( Georgia- May 13)

” Love& Hip Hop: Atlanta” idol Maurice Fayne was indicted on hoax costs over a $3,725, 500 PPP loan have applied for his corporation, Flame Trucking. Fayne allegedly claimed “hes having” 107 employees and submitted forged bank evidences. It’s alleged he then blew the money on a Rolex Presidential watch, a 5.73 carat diamond ring and other jewelry. He also allegedly applied the money to pay $ 50,000 for reparation in a previous scam speciman, $40,000 in back child endorsement, $139,000 to lease a Rolls Royce Wraith — and $230,000 to affiliates who helped him pass a Ponzi scheme. When arrested, he had almost $ 80,000 in currency at his home and $9,400 in his pocket, governments claim.

East Texas Man and the Online Name Generator( Texas- May 19)

Samuel Yates of Maud, Texas is charged with fraudulently is asking for$ 5 million with two different lenders. He claimed to have 400 hires, but actually had zero. The objection claims Yates exerted a call generator on the Internet to create lists of bullshit works. He also supposedly submitted forged tariff records.

Manhattan Businessman( New York- May 21)

Muge Ma, a/ k/ a “Hummer Mars, ” a Chinese national residing in Manhattan, was arrested on charges of trying to obtain over $20 million in PPP and EIDL money. Ma is alleged to have falsely represented to the SBA and five international financial institutions that his firms had hundreds of works when he was the only employee. He too supposedly was involved in a scheme claiming to represent the New York State Government in procuring COVID-1 9 test equipment.

Hollywood Film Producer( California- May 22)

William Sadleir, the ousted head of Aviron Pictures, was charged with wire and bank impostor in connection with a $1.7 million PPP loan. He reportedly exploited some of the money to pay off $ 80,000 in personal credit cards and a $40,000 car loan. Sadleir was Executive Producer on cinemas like Serenity, starring Matthew McConaughey. In an unrelated matter the SEC accused Sadleir with reportedly victimizing investors of $13.8 million through Aviron.

Lyft Software Engineer( Washington- May 22)

Baoke Zhang, a software engineer at ride share company Lyft, is charged with wire and bank impostor. He allegedly started forgery engineering companies to obtain $ 1.5 million in funds. U.S. Attorney Brian T. Moran said in a statement, “I am pleased that the systems designed to detect and disavow sham remittances caught his programme before federal funds used to go the door.”

Man on Parole( Virginia- May 29)

Joseph Cherry II of Virginia was indicted on 10 countings of COVID fraud and faces 10 to 30 years of prison time on each counting. Cherry was on administered exhaust in an unrelated federal suit when he applied to the SBA program. It is alleged he got over $190,000 in follows and managed to withdraw cash or cashier’s checks for $140,000.” Providing false statements to gain access to SBA’s planneds will be aggressively investigated by our bureau ,” said Hannibal Ware, Inspector General of the U.S. Small Business Administration, in the following statement.

Walmart Project Manager( Oklahoma- June 4)

Benjamin Hayford is charged with impostor for seeking about $4.4 million in PPP financing. He allegedly verified that his business was operating as of February 15, 2020( a requirement of the law) and had 247 employees. Lawyers say a hunting of his email history registered he didn’t even set up a company until a few days before utilizing in April. At the time of his arrest Hayford was a Project Manager for Walmart. The retail being suspended him and territory service charges were unrelated to Walmart.

Auto Repair Shop Owner( California- June 5)

Geoffrey M. Palermo of Novato faces bills of wire fraud and starting inaccurate words. The onetime overseer of the San Francisco Hilton supposedly filched from the inn in a kickback scheme going back to 2013. After leaving the hotel he opened GMP Cars, an vehicle repair shop. In April he supposedly find a PPP loan of $1.7 million by falsely showing that GMP Cars had works for whom it paid wages and payroll taxes. In reality, according to the criminal complaint, Palermo use corporation funds for lavish personal expenses including a Ferrari racing car, leaving the business in fiscal distress.

IT Company Business Owner( Illinois- June 16)

Rahul Shah of Evanston is charged with bank fraud and building false testimonies to a international financial institutions. He supposedly applied for $ 441,000 under the Federal Paycheck Protection program for various firms. The charges “re saying he” deferred hoax IRS documentation. Various souls he reportedly submitted payroll documentation for said they never worked for his corporation, per investigates.

Austin High Roller( Texas- June 18)

Michael George McQuarn, 51, of Austin, is the responsibility of with fraudulently receiving over$ 2 million in SBA loans for two fictional fellowships, Vantastic Voyages, LLC and Happy Date Movers, LLC. McQuarn supposedly squandered the money for personal roles including to purchase a 26 -foot Pavati Wake Boat and a Rolls Royce.

IT Assistance Company Owner( Massachusetts- June 22)

Elijah Majak Buoi, director of Sosuda Tech LLC, is charged with fraudulently is asking for over $13 million in PPP aid. Buoi reportedly misinterpreted how many employees he had and that the United District was their primary residency( involved ). He ultimately received during$ 2 million however clutched $1.98 million from business bank account.

Wedding Planner( Texas- June 23)

This proprietor of a wed scheduling company is charged with submitting two PPP lotions, and claiming to have 120 employees where reference is actually had none. Fahad Shah came $1.5 million in funds. He supposedly worked the money to buy a Tesla car, see personal speculations and meet his home mortgage payments.

Married Couple Attempting to Flee( Virginia- June 24)

The FBI comprehended Monica Jaworska and her husband Tarik Jaafar at JFK Airport reportedly attempting to flee to Poland. The compensate are charged against submitting 18 fraudulent Paycheck Protection employments with speciou payroll tax returns, and receiving $1.4 million in funds. The Feds managed to freeze most of the funds but not before the couple allegedly withdrew $30,000 in currency.

Funeral Director( Texas- June 24)

Jase DePaul Gautreaux aka Jase Dixon, a funeral undertaker in Houston, is the responsibility of searching $13 million in funds and eventually receiving over $1.6 million. The criminal complaint bills him with spuriou proclamations to a international financial institutions, bank fraud and engaging in illegitimate money transactions. He allegedly referred employments on behalf of a business that did not exist and for businesses he did not own.

Owner of Private Investigation Firm( Ohio- June 24)

Nadine Consuelo Jackson is charged with bank fraud and other freights for seeking forgivable loans in the amount of $1.3 million, $1.2 million and the other $46,000 in Economic Injury Disaster funding. She reportedly claimed to have 73 hires at her Dayton private investigation business. Three parties she allegedly claimed as employees told reviewers they never heard of her corporation. The bank echoed one loan and the Government confiscated funds for the other two.

Ophthalmologist Already Under Indictment( New York- June 24)

Apparently one forgery isn’t enough for some people. Meet Goyal, MD, an ophthalmologist in Rye, New York, was under indictment for healthcare impostor. That didn’t stop him from supposedly applying for two PPP loans exploiting different business reputation. He also allegedly lied attesting he had no pending indictments. Acting U.S. Attorney Audrey Strauss said,” Goyal allegedly looted over $630,000 in federal stores earmarked for legitimate small and medium-sized businesses in grim financial channels .”

Seattle Doctor( Washington- June 30)

Dr. Eric R. Shibley is charged with one count of cable fraud and one count of bank impostor. The grumble alleges he applied several times to get aid totaling$ 3 million, in the names of businesses with no actual actions. He supposedly lied about his criminal past, and referred sham tariff documents including identifies of people who did not work for the businesses.

Man Under Indictment( Wisconsin- July 8)

Ahmad Kanan, formerly of Madison, is charged with wire cases of fraud and fund cleaning. He reportedly applied for two credits totaling $119,560 acting as owner of Altin Labs, Inc. The arraignment alleges Kanan was under federal prosecution on an unrelated matter at the time. He then supposedly conveyed $47,000 to his personal checking account.

Trucking Company Owner( Utah- July 8)

Hubert Ivan Ugarte of Draper, with the assistance of Lisa Bradshaw Rowberry of Provo are charged against fraudulently obtaining a PPP loan of $210,000. He reportedly lied about not being under criminal charges — he in fact was under indictment for a bribery programme. After two banks diminished, Rowberry allegedly said she would help him re-apply through a friend. Ultimately Ugarte received funds from Transportation Alliance Bank. Ugarte reportedly abused funds for past due truck pays to Kenworth instead of required payroll.

Medical Company Owner( Florida- July 10)

Carlos Belone is charged with wire fraud and other bills in connection with various fraudulent PPP applications. He supposedly got $22,000 which he then situated partly into a personal account and partially committed to another fellowship in furtherance of a $5.6 million Medicare kickback scheme.

Construction Company Owner( Washington D.C.- July 13)

Oludamilare Olugbuyi is the responsibility of fraudulently obtaining two PPP loans totaling more than $ 400,000. Allegedly he deferred fake IRS 1099 Forms containing worker social security multitudes that were invalid. The accusation claims he submitted a tax return reporting $175,565 income for taxation time 2019. However, on April 14, 2020, Olugbuyi allegedly registered a 1040 “non-filer return” reporting$ 1 in income for 2019 which modified him to receive a $1,200 fiscal impact payment.

The Cryptocurrency Investor( Texas- July 14)

Joshua Thomas Argires of Houston was arrested on numerous impostor indicts. Argires supposedly registered two fraudulent lotions endeavouring $1.1 million in pardonable fund. One was on behalf of a company announced Texas Barbecue and the other announced Houston Landscaping. Argires reportedly vested some of the advances in a cryptocurrency report and withdrew other stores via ATM transactions.

The Vegas High Roller( California- July 16)

It’s easy to take risks on period trading and gambling when you’re using taxpayer fund. Andrew Marnell of Los Angeles is charged with bank forgery. He reportedly exercised aliases to obtain $ 8.5 million in aid using fake tax filings and falsified records of payroll expenditures. He reportedly blew through about $200,000 in Las Vegas casinoes, where he was caught on surveillance cameras at a Bellagio blackjack table. Jurisdiction too claim he lost $ 500,000 on risky stock market business. Pits Fargo previously shot him for robbery, according to news reports.

Handmade Entrepreneur( Arkansas- July 16)

Ganell Tubbs, the entrepreneur owned of Little Piglet Soap Company and Suga Girl Customs, an Etsy shop, is the responsibility of fraudulently obtaining nearly$ two million in PPP loans. Days later she paid $8,000 on her student loan and then went on a spending rampage at Sephora and other retailers, it is alleged.

Ex-Microsoft Executive( Washington- July 23)

Mohan Mukand, who used to work for Microsoft and Amazon according to his LinkedIn profile, is charged with submitting 8 PPP employments on behalf of six companionships. According to the U.S. Advocates part, the companies didn’t exist or didn’t have the employees he claimed. Jurisdictions allege he bought a company on the Internet in May with no works, and then forged documents to claim he had paid millions in payroll taxes in 2019. He reportedly assigned a one-fourth billion dollars of proceeds to his personal brokerage account.

High-Living Florida Man( Florida- July 27)

David T. Hines of Miami is charged with fraudulently endeavouring $13.5 million in PPP money expend fraudulent announcements about various companionships’ payroll expenditures. He was approved for $ 3.9 million. Dates last-minute he reportedly bought a 2020 Lamborghini Huracan sports car for $318,000. He also allegedly lavished money at comfort retailers and Miami useds.

Miami Chiropractor( Florida- July 29)

Dennis Nobbe, a chiropractor in Miami, is charged with wire impostor, health care fraud, fund laundering and conspiracy. He supposedly obtained $200,000 in Paycheck Protection Program and Economic Injury Disaster funds and used the money for personal expenditures. Accusations likewise claim he perpetrated a credit card scam on low-income patients. He reportedly went cases to open credit cards to pay for out-of-pocket medical expenses for services he did not fully render.

Houston Partier( Texas- August 4)

Lee Price III is the responsibility of fixing incorrect explanations to a international financial institutions, wire fraud, bank fraud and engaging in illicit cash deals. He reportedly received over $ 1.6 million. He then gone on a indulgence buying blitz acquiring a Lamborghini Urus, a Rolex watch, a 2020 Ford F-3 50 pick-up truck, and real estate — according to charges. He supposedly expended thousands at deprive squads and nightclubs.

The DOJ and U.S. Advocates are using a variety of charges for enforcement, including cable hoax( 18 U.S.C. SS 1343) and fixing false announcements to the SBA and FDIC-insured banks( 18 U.S.C. SS 1014 ). Depending on the charges, retributions could include up to$ 1 million in punishments and up to 30 “years imprisonment”, legal experts say.

But of course, the government has to prove the allegations. Justice Department solicitors remind you that,” A criminal complaint is merely an allegation and a accused is presumed innocent until proven guilty beyond a reasonable disbelieve in a court of law.”

More Prosecutions on the Horizon

PPP money is still existing and the present deadline for the purposes of applying is August 8, 2020( unless extended ). A total of approximately $649 billion has been authorized by Congress, leaving $130 billion still available for small businesses as of July 24 th.

Have we examine the last of PPP fraud prosecutions? No. New ones are being announced weekly. But it’s important to remember that 30 scams out of 5 million credits is a minuscule number. The overwhelm majority of loans have no allegations of fraud circumventing them.

Still, a June report by the Government Accountability Office received,” there is a significant risk that some fraudulent or increased employments were approved .” Treasury Secretary Steven Mnuchin announced that the Treasury Department would review every PPP loan over$ 2 million. However, the GAO recommended oversight of the more than 4 million smaller loans, also.

The government watchdog too pressed for safeguards and oversight plans to avoid doubled plunge. There’s a recommendation to audit COVID-1 9 unemployment insurance benefits paid to workers rehired by boss applying PPP loan funds.

Yet to Come: The PPP Forgiveness Process

Another wrinkle is the loan forgiveness process. Millions of small businesses eventually will apply for forgiveness. That’s bound to trigger another round of scrutiny.

In order to get Paycheck Protection lends forgiven and not have to repay the money, small business owners have to show proof that at least 60% of the money was used for payroll and the rest for other permitted outlays. A requirement of forgiveness is that borrowers must rehire or retain proletarians — and maintain salary levels.

The DOJ has signaled it may also pursue civil penalties not just criminal prosecutions, especially around lend forgiveness. Principal Deputy Assistant Attorney General Ethan P. Davis noted in a June 26 th pronunciation:” When the borrower is ready to seek forgiveness of the loan, it has to certify that the funds were in fact used to pay expenses that are eligible for forgiveness. If eligible applicants intentionally reacts any of these questions falsely, it may face False Claims Act liability .”

This means you have to be just as scrupulous when applying for forgiveness as when you applied for the money initially. The False Claims Act can impose immerse civil penalties, including treble damages.

If the PPP debt is not forgiven, the interest rate is very low — 1 %. Occupations that have to repay the money get 2 years to repay if funding was issued before June 5. If you got funding after June 5, you have five years to refund. The PPP promissory note you indicated will have the terms applicable to you. See the SBA website for informed forgiveness info.

Should Business Owners Be Upset?

It’s a creepy thing for legitimate business owners to sign borrower certifications under possible a sentence of penalties and prison time. The SBA curricula have complex regulations. It could be easy to trip up innocently.

This has caused some entrepreneurs and business owners to think twice about requesting. No one under pressure of this pandemic wants to fumble on a technicality while legitimately trying to pay employees and keep their life’s work afloat. One neighbourhood businesswoman told me she cried for two weeks before exerting because of her dreads over confusing requirements.

Representatives of the Department of Justice say honest owneds acting in good faith shouldn’t worry. Stephen J. Cox, the U.S. Attorney for the Eastern District of Texas, wrote in an op-ed in Texas Lawyer 😛 TAGEND

” Rest responsible for ensuring that we will be careful not to discourage legitimate ventures from retrieving the important financial resources that Congress made available through the CARES Act. We will not punish companies that accessed stimulus monies in good faith compliance with the rules. Nor, will we seek out applicants who started technological mistakes in processing paperwork or honestly misinterpret regulatory or certification requirements. Our focus is on fraud .”

Let’s hope the entire government is on the same page as Mr. Cox.

This article is not intended as legal advice. It’s intended to offer news and peer attitude on an important issue that affects us as business owners. Stay informed and check with your attorney and/ or accountant with questions.

Case data source and likenes source: Justice.gov

This article, “30 PPP Fraud Prosecutions So Far, and Counting” was first published on Small Business Trends