Expeditious crackdown on COVID rescue fraud | Stinson – Public procurement issues
In just days, the Department of Justice (DOJ) arrested and charged scores of people in Virginia, Massachusetts, Texas and Ohio, alleging they had fraudulently applied for loans from the program. Payroll Check Protection (PPP) under the Coronavirus Aid, Relief, and Economic Security Act (CARES).
At John F. Kennedy Airport, a couple from Virginia were stopped on June 20 for COVID relief loan fraud as he tried to flee the country to Poland. Monica Magdalena Jaworska has appeared in court for the first time on a charge of conspiracy to commit electronic fraud by submitting bogus loan applications in connection with the COVID-19 outbreak. Apparently, the couple submitted 18 PPP loan applications, with false statements to over 12 financial institutions under four different business entities, and received over $ 1.4 million in proceeds under the PPP.
June 22sd, Elijah Majak Buoi of Winchester, Massachusetts, was accused with wire fraud. The complaint alleged that Buoi was the president and CEO of Sosuda Tech LLC and had submitted fraudulent claims for more than $ 13 million in PPP loans through SBA-approved lenders. In the request, Buoi allegedly misrepresented the number of employees, salary expenses, and falsely certified that the United States was the primary residence of its employees. Buoi has reportedly received over $ 2 million in PPP funds, and the government was able to seize around $ 1.98 million from corporate bank accounts.
Fahad Shah of Murphy, Texas was arrested on June 23rd and accused with three counts of wire fraud, one count of misrepresenting a bank and four counts of money laundering. It is alleged that Shah submitted fraudulent applications for over $ 3 million PPP loans to two different SBA approved lenders and filed them as WBF Weddings by Farah Inc. In addition to submitting fraudulent documents, Shah claimed to have more than 120 employees earning a salary, while he did not have any. The DOJ estimates that Shah received over $ 1.5 million in PPP loans, but used the loans for personal gain, such as buying a Tesla, making personal investments, and paying for mortgages on a personal house.
June 24e, another Texas resident, Jase DePaul Gautreaux, a funeral home operator in Houston, Texas, was accused by making false statements to a financial institution, by electronic fraud, by bank fraud and by engaging in illegal monetary transactions. Apparently Gautreaux requested over $ 13 million in PPP loans, ultimately receiving over $ 1.6 million. Additionally, Gautreaux forged his identity, misrepresented the number of employees working in the company, misrepresented salary expenses, and falsified tax documents and bank account information as part of the pursuit of PPP funds.
Also on June 24e, a Dayton business owner faced charges in court in connection with COVID-19 loan relief fraud, which included bank fraud and making false statements to a bank. The owner of the company applied for two PPP loans totaling $ 1.5 million, claiming to have 73 employees working in a private investigation and security service. However, reports indicated that there were few employees working for the company.
From the first arrests made in early May to the most recent DOJ accusations in June, similar fraudulent behavior was allegedly used to obtain PPP financing: requesting multiple loans from SBA-approved lenders, inflating the number of employees working in the company and even build the business as a whole.
The PPP loan application deadline has been expanded. A Word to Those Applying for PPP Loans – Fraud Doesn’t Pay! Make sure your request is correct and complete.
Lariss Maldonado and Allison Kruse, a summer associate in Stinson’s Minneapolis office, are responsible for the content of this article.