30 PPP Fraud Prosecutions So Far, and Counting

Paycheck Protection Program (PPP) loans have helped more than 5 million small business owners, providing a much needed lifeline during the Coronavirus outbreak catastrophe. The majority of business owners will be legitimate and will use the cash as intended stay operational and to retain employees.

However, the PPP application has attracted a few rotten apples. And you also won’t think they are.

So far, the Justice Department has filed 30 PPP fraud instances. Defendants are charged with bilking taxpayers from tens of millions of dollars. The Feds have recovered a big area of the loan proceeds already.

And that which ’s been recovered tells a tale that is wild.

Feds have captured a 2020 Lamborghini Huracan sports car, also a Rolex Presidential watch, a 5.73-carat diamond ring, and a diamond bracelet — all purchased with PPP loan cash. Other loot Contains a Tesla, a 26-foot Pavati Wake Boat, 2 Rolls-Royces, a Lamborghini Urus, and also a Ford F-350 pickup truck.

Authorities recovered other assets, froze bank accounts, and seized cash hoards.

Some defendants withdrew taxpayer cash on spending sprees, such as Las Vegas gambling, visits to strip clubs, along with day-trading. In 1 case, a married couple was apprehended at JFK Airport supposedly trying to flee the country after submitting 18 deceptive applications.

Every government program attracts a small number of grifters and offenders. Along with also the DOJ has made it a priority to root them out. On March 16, 2020,” Attorney General William Barr led all 94 U.S. Attorneys’ Offices to reevaluate investigating and prosecuting PPP loan fraud cases.

PPP Loan Program Results

On March 27, 2020 Congress passed and President Trump signed the Coronavirus Aid, Relief, and Economic Security Act — or CARES Act. It approved the Paycheck Protection Program. PPP is a non invasive, forgivable loan application designed to assist little companies and people.

In an example of government rate, the Small Business Administration started accepting loan programs after April 3, 2020. During July 24, the SBA has approved 5,005,261 loans, constituting $519,505,881,228, demonstrating its achievement .

Most the funds will help the country ’s 31 million small companies , there’s no doubt about it. The amount of fraud prosecutions is extremely modest by comparison.

30 PPP Fraud Cases – So Far

Would these prosecutions demand nothing more than paperwork errors? They do not seem to be honest errors. All seem to involve situation — assuming the authorities proves the truth. Some defendants were under indictment for some different fees. Others hid their ago.

This ’s a rundown of the 30 PPP loan fraud cases so far with some of the lurid details alleged:

2 Men, Identity Theft and also a Conspiracy (Rhode Island – May 5)

David A. Staveley, aka Kurt D. Sanborn, and David Butziger were charged with conspiring to find over $530,000 in PPP cash. It’s alleged they falsely asserted to have tons of workers at 4 unique companies, such as a restaurant owned. They discussed their fraud email and one supposed that their brother’s identity. Special Agent in Charge Joseph R. Bonavolonta of those FBI’s Boston Field Office said in a statement, “Thankfully we were able to prevent them until taxpayers were defrauded. ”

Texas Engineer (Texas – May 13)

Shashank Rai, an engineer from Beaumont, is charged with multiple counts of fraud and false statements to the SBA for hunting more than $10 million in PPP funds. He claimed to have 250 workers if there isn’t any list of some in his enterprise, Rai Family LLC. Court documents allege that handwritten notes recovered from his trash clarify how he planned to use $3 million of the cash for investments.

Reality TV Personality (Georgia – May 13)

“Love & Hip Hop: Atlanta” celebrity Maurice Fayne was indicted over a 3,725,500 PPP loan program because of his firm, Flame Trucking. Fayne supposedly promised he had 107 employees and submitted bank statements that were forged. It’s alleged he then drove the cash over a Rolex Presidential watch, a 5.73 carat diamond ring and other jewelry. He also allegedly used the money to pay $50,000 for restitution in a former fraud case, $40,000 in back child support, $139,000 to lease a Rolls Royce Wraith — and $230,000 to partners who helped him operate into a Ponzi scheme. When he had nearly $80,000 in cash at $ 9,400 in his pocket along with his house, authorities claim.

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

Samuel Yates of Maud, Texas is charged with fraudulently using for about $ 5 million with two lenders. He promised to have 400 workers, but really had zero. The criticism claims Yates used a name generator on the Internet to make names of workers. He also submitted tax documents that were forged.

Manhattan Businessman (New York – May 21)

Muge Ma, a/k/a “Hummer Mars,” a Chinese national living in Manhattan, was detained on charges of attempting to get over $20 million in PPP and EIDL cash. Ma is still alleged to have represented to the SBA and five financial institutions that his employers had countless workers when he had been the sole worker. He supposedly was involved with a scheme promising to reflect the New York State Government in procuring COVID-19 test kits.

Hollywood Film Producer (California – May 22)

William Sadleir, the ousted head of Aviron Pictures, was charged with wire and bank fraud in connection with a $1.7 million PPP loan. He used a few of the money to pay off $80,000 in a $40,000 car loan plus credit cards. Sadleir was Executive Producer on movies including Serenity, starring Matthew McConaughey. In an unrelated matter the SEC charged Sadleir with allegedly defrauding investors of $13.8 million throughout Aviron.

Lyft Software Engineer (Washington – May 22)

Baoke Zhang, an applications engineer at ride share firm Lyft, is charged with wire and bank fraud. He supposedly established fake technology businesses to get $1.5 million in funds. U.S. Attorney Brian T. Moran said in a statement, ” & ldquo;I am happy that the systems created to detect and refuse fraudulent payments caught his strategy until federal funds went outside the door. ”

Man on Parole (Virginia – May 29)

Joseph Cherry II of Virginia was indicted on 10 counts of COVID fraud and faces 10 to 30 decades of prison time on every count. Cherry was on supervised release in an unrelated federal case when he applied to the SBA program. It’s alleged he got in profits over $190,000 and was able to withdraw cashier or cash ’s checks for $140,000. “Providing false statements to get access to SBA’s applications will be aggressively investigated by our workplace,” said Hannibal Ware, Inspector General of the U.S. Small Business Administration, in an announcement.

Walmart Project Manager (Oklahoma – June 4)

Benjamin Hayford is charged with fraud for hunting about $4.4 million in PPP funding. He supposedly certified his company had been working as of February 15, 2020 (a necessity of the law) and’d 247 workers. Prosecutors say a hunt of his email account showed he didn’t even set up a business until a few days before implementing in April. In the time of the arrest Hayford was also a Project Manager for Walmart. The giant suspended him and stated the fees were unrelated to Walmart.

Automobile Repair Shop Owner (California – June 5)

Geoffrey M. Palermo of Novato faces charges of fraud and making false statements. The manager of the San Francisco Hilton allegedly embezzled heading back into 2013. After leaving the hotel he opened GMP Cars, an automobile mechanic. Back in April he supposedly obtained a PPP charge of $1.7 million by falsely certifying that GMP Cars had workers for whom it paid wages and payroll taxes. According to the criminal complaint, Palermo used company funds for lavish personal expenses such as a Ferrari racing car, which makes the company in financial distress.

IT Company Business Owner (Illinois – June 16)

Rahul Shah of Evanston is charged with bank fraud and making false statements to a bank. He applied under the Federal Paycheck Protection application for companies. The allegations say he submitted IRS documentation. Individuals he allegedly submitted payroll documentation for said they never worked per researchers, for his firm.

Austin High Roller (Texas – June 18)

Michael George McQuarn, 51, of Austin, has been charged together with fraudulently getting over $2 million in SBA loans for two fictitious companies, Vantastic Voyages, LLC and Happy Days Movers, LLC. McQuarn supposedly used the money for personal purposes such as purchasing a Pavati Wake Boat and a Rolls Royce.

IT Services Company Owner (Massachusetts – June 22)

Elijah Majak Buoi, president of Sosuda Tech LLC, has been charged with fraudulently using for more than 13 million in PPP aid. Buoi allegedly reversed how many workers he needed and the United States had been their principal residence (required). He finally received over $2 million but the authorities captured $1.98 million from business bank accounts.

Wedding Planner (Texas – June 23)

This owner of a wedding planning firm is charged with filing two PPP programs, and promising to have 120 workers when he had none. Fahad Shah got $1.5 million in funds. He allegedly used the money to purchase a Tesla car, make investments and make his house mortgage payments.

Married Couple Attempting to Flee (Virginia – June 24)

The FBI apprehended Monica Jaworska along with her husband Tarik Jaafar at JFK Airport allegedly attempting to flee Poland. The paid have been charged with filing 18 fraudulent Paycheck Protection applications with false payroll tax returns, and getting $1.4 million in funds. The Feds was able to suspend the majority of the funds but not until the couple supposedly withdrew $30,000 in cash.

Funeral Director (Texas – June 24)

Jase DePaul Gautreaux aka Jase Dixon, a funeral director in Houston, has been charged with hunting $13 million in funds and finally getting over $1.6 million. Him charges false statements to a financial institution and participating in financial transactions. He allegedly submitted applications on behalf of a company that did not exist and also for companies he did not possess.

Owner of Private Investigation Firm (Ohio – June 24)

Nadine Consuelo Jackson is charged with bank fraud and other fees for hunting forgivable loans in the amount of $1.3 million, with $1.2 million and another $46,000 from Economic Injury Disaster funding. She claimed to have 73 workers at her Dayton private investigation firm. Three people as workers told researchers they, she supposedly claimed never heard of her firm. The lender recalled one loan and the Government seized funds.

Ophthalmologist Already Under Indictment (New York – June 24)

Apparently 1 fraud isn to many people. Meet Goyal, MD, an ophthalmologist in Rye, New YorkRye was under indictment for healthcare fraud. This didn’t prevent him from applying for 2 PPP loans utilizing business names. He also lied certifying he had no indictments. Acting U.S. Attorney Audrey Strauss said, “Goyal allegedly looted over $630,000 in federal funds allowed for legitimate modest companies in dire financial straits. ”

Seattle Doctor (Washington – June 30)

Dr. Eric R. Shibley is charged with a single count of wire fraud and one count of bank fraud. The complaint said that he implemented several times to acquire help totaling $3 million, in the names of companies with no real operations. He lied about his past, and submitted bogus tax documents such as names.

Man Under Indictment (Wisconsin – July 8)

Ahmad Kanan, formerly of Madison, is charged with money laundering and wire fraud. He allegedly applied for 2 loans totaling $119,560 behaving as owner of Altin Labs, Inc.. The indictment alleges Kanan was under indictment on a unrelated matter at the time. $47,000 was then transferred by him to his checking account.

Trucking Company Owner (Utah – July 8)

Hubert Ivan Ugarte of Draper, with the assistance of Lisa Bradshaw Rowberry of Provo are charged with fraudulently obtaining a PPP loan of $210,000. — he in fact was under indictment for a bribery strategy was lied about not being under fees by him. Following two banks diminished, Rowberry allegedly said she’d assist him. Finally Ugarte received funds from Transportation Alliance Bank. Ugarte used funds to Kenworth instead of citizenship.

Medical Company Owner (Florida – July 10)

Carlos Belone is charged with wire fraud and other fees in connection with several PPP applications. He supposedly got $22,000 he deposited partly into a personal account and partly gave to another firm in furtherance of an $5.6 million Medicare kickback scheme.

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

Oludamilare Olugbuyi is charged with fraudulently obtaining two PPP loans totaling more than $400,000. Allegedly he submitted IRS 1099 Forms containing employee. The criticism claims that he submitted a tax return coverage $175,565 income for tax year 2019. On April 14, 2020, Olugbuyi supposedly filed a 1040 “non-filer yield ” coverage $1 in income for 2019 which qualified him to receive a $1,200 economic effect payment.

The Cryptocurrency Investor (Texas – July 14)

Joshua Thomas Argires of Houston was detained on various fraud charges. Argires supposedly filed two fraudulent applications seeking $1.1 million in funding financing. One was on behalf of a firm named Texas Barbecue and the other called Houston Landscaping. Argires supposedly invested some of the profits in a cryptocurrency account and withdrew other funds through ATM transactions.

The Vegas High Roller (California – July 16)

It so easy whenever you ’ re using taxpayer money, to take risks on betting and day trading. Andrew Marnell of Los Angeles is charged with bank fraud. He supposedly used aliases to get $8.5 million in support using fake tax filings and falsified records of payroll expenses. He blew through about $200,000 in Las Vegas casinos, where he had been caught on surveillance cameras at a Bellagio blackjack table. Authorities also assert he lost $500,000 on stock market trades. Wells Fargo previously fired him according to news reports.

Handmade Entrepreneur (Arkansas – July 16)

Ganell Tubbs, the entrepreneur proprietor of Little Piglet Soap Company along with Suga Girl Customs, an Etsy store, has been charged with fraudulently receiving almost $2 million in PPP loans. Days after she paid $ and then proceeded on a spending spree at Sephora along with retailers, it is alleged.

Ex-Microsoft Executive (Washington – July 23)

Mohan Mukand, that used to work for Microsoft and Amazon according to his LinkedIn profile, is charged with filing 8 PPP applications on behalf of six firms. According to the U.S. Attorneys workplace, the companies didn’t exist or didn’t have the workers he claimed. Authorities allege he bought a business on the Internet in May without the workers, and then forged documents to claim he had paid millions in sales taxes. He transferred a thousand thousand dollars of profits to his brokerage account.

High-Living Florida Man (Florida – July 27)

David T. Hines of Miami is charged with fraudulently seeking $13.5 million in PPP cash using false statements about different companies’ payroll expenses. He had been approved for $3.9 million. Days after he supposedly bought a 2020 Lamborghini Huracan sports car for $318,000. He also squandered cash at luxury retailers along with Miami hotels.

Miami Chiropractor (Florida – July 29)

Dennis Nobbe, a chiropractor in Miami, is charged with money laundering, healthcare fraud, and wire fraud and conspiracy. He got $200,000 in Paycheck Protection Program and Economic Injury Disaster capital and used the cash. Allegations assert he perpetrated a credit card scam on patients. He got patients to start bank cards to pay for costs for services he did not render.

Houston Partier (Texas – August 4)

Lee Price III is charged with making false statements to a bank, bank fraud, wire fraud and participating in financial transactions. He supposedly received over $1.6 million. He went on a luxurious buying blitz obtaining a Lamborghini Urus, a Rolex watch, a 2020 Ford F-350 pickup truck, and also real estate — according to allegations. He wasted tens of thousands at nightclubs and strip clubs.

The DOJ and U.S. Attorneys are employing various fees for enforcement, such as cable fraud (18 U.S.C. § 1343) and making false statements to the SBA and FDIC-insured banks (18 U.S.C. § 1014). Depending on the fees, penalties may include up to $1 million in penalties as well as 30 years in prison, legal experts say.

However, clearly, the government must prove the allegations. Justice Department lawyers remind everybody that, “A criminal complaint is merely an allegation and a defendant is presumed innocent until proven guilty . ”

More Prosecutions on the Horizon

PPP cash is still accessible and the current deadline for applying is August 8, 2020 (unless extended). A total of approximately $649 billion was approved by Congress, leaving $130 billion for small companies as of July 24th.

Perhaps you have seen the last of PPP fraud prosecutions? No. New ones have been announced each week. However, it s important to remember that 30 scams from 5 million loans is a minuscule amount. The majority of loans don’t have any allegations of fraud.

Still, a June report by the Government Accountability Office found, “there’s a substantial threat that some faulty or cracked programs were approved. ” Treasury Secretary Steven Mnuchin declared the Treasury Department could review each PPP loan over $2 million. The GAO suggested oversight of the loans , also.

The government watchdog pressed for guards and oversight plans to steer clear of double dipping. There s an recommendation to audit COVID-19 unemployment benefits paid to workers rehired by employers using PPP loan funds.

Yet to Come: The PPP Forgiveness Process

Another wrinkle is that the loan forgiveness process. Prejudice will be eventually applied for by millions of small companies. This ’s jump to trigger yet another form of scrutiny.

So as to get Paycheck Protection loans forgiven and not have to pay off the money, small business owners have to demonstrate evidence that 60% of the cash was used for the remainder and payroll for other expenses that are permitted. A requirement of bias is that borrowers maintain salary levels and retain or need to rehire workers —.

The DOJ has signaled it could pursue civil penalties not just criminal prosecutions, particularly loan forgiveness. Principal Deputy Assistant Attorney General Ethan P. Davis noted in a June 26th speech: “When the borrower is ready to find forgiveness of the loan, it must stipulate that the funds were in fact used to pay costs that are eligible for forgiveness. If an applicant knowingly answers some of these questions it may confront False Claims Act liability. ”

This means you’ve got to be as if you applied for your own cash equally as meticulous when searching for forgiveness. The False Claims Act can inflict exorbitant penalties, such as damages.

In the event the PPP debt isn’t forgiven, the interest rate is extremely low — 1 percent. Businesses that have to pay off the cash get to refund if funding was issued prior to June 5. If you have funding after June 5, you’ve got five years. The PPP promissory note you signed will have the conditions applicable to you. See the SBA site for updated Registration data .

Should Business Owners Be Worried?

It’s ’s a thing for legitimate business owners to sign borrower certificates under possible penalties of fines and prison time. The SBA applications have rules. It could be simple to venture up.

It has caused a few entrepreneurs and business owners to think twice about implementing. While trying to pay workers and maintain their lifestyle ’ s work afloat, Nobody under stress of the pandemic needs to tack on a technicality. One local businesswoman explained she prayed before implementing because of her anxieties over requirements.

Agents of the Department of Justice say owners acting. Stephen J. Cox, the U.S. Attorney for the Eastern District of Texas, wrote in an op-ed in Texas Lawyer:

“Rest assured that we’ll be cautious not to discourage legitimate companies from getting the important assets that Congress made accessible throughout the CARES Act. We won’t punish companies that obtained stimulus funds in good faith compliance. But will we seek out honestly or applicants who made technical errors in processing coverage misunderstood regulatory or certification requirements. Our attention is really on fraud. ”

Permit ’s hope the whole government is on the exact identical page as Mr. Cox.

This article isn’t meant as legal info. It s meant to offer peer and news perspective on an issue that impacts us. Stay consult your attorney and/or accountant with queries and informed.

Case information source and image source: Justice.gov

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

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