By: States Attorney.
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New York Man Charged for Multiple Fraudulent PPP Loan Applications
A new announcement was made to report yet another case of a fraudulent scheme targeting the COVID-19 Relief Program. A man from the City of Buffalo in the State of New York has been charged in a criminal complaint, which was unsealed on February 19, 2021, with allegations of taking part in a conspiracy that intended to defraud multiple financial institutions and abuse the United States government’s Paycheck Protection Program (PPP) via filing fraudulent bank loan applications for the forgivable loans guaranteed by the Small Business Administration (SBA).
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Defendant and Details of the Criminal Complaint
Christian Johnson, 23, has been charged with bank fraud, wire fraud, and false statements to financial institutions after being served with a federal criminal complaint for illegally seeking PPP forgivable loans from several financial institutions through falsifying documents. The criminal complaint alleges that defendant Johnson has submitted a number of fraudulent loan applications to the Paycheck Protection Program under a company called Million Man LLC. Furthermore, the applications were said to contain numerous falsified documents and erroneous and misleading statements regarding the operations of the Million Man company and the business itself. Defendant Johnson was reported to have lied in the loan applications and have faked several details, including its number of employees and its average monthly payroll. On top of that, he managed to falsify documents such as payroll records and federal tax documents to support and cover up the fraudulent PPP loan application that he submitted. This act of crime was extremely abused and took advantage of the COVID-19 pandemic that severely affects the world in many different aspects, including putting the United States under an economical crisis. Not only did Johnson allegedly defrauded the Paycheck Protection Program of the government, but he has also deprived numerous small businesses and American citizens of the financial aid that is meant to assist them in surviving through a sizeable economic downturn caused by the global pandemic.
The Paycheck Protection Program
The Paycheck Protection Program is a source of relief administered by the United States Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Securities (CARES) Act. On March 29, 2020, the federal law CARES Act was enacted, directed towards providing emergency financial assistance to millions of American citizens, particularly those suffering the economic effects caused by the global pandemic. In a part of the $2.2 trillion funds designated to carry out the goals of the CARES Act, the Paycheck Protection Program was put together to bring emphasis on aiding small businesses that are struggling to manage their payrolls as they have been drastically financially damaged due to the COVID19. The CARES Act allowed the authorization of up to $349 billion in forgivable loans for the first round of the Paycheck Protection Program, which was distributed to qualifying small businesses in order to assist in job retention and certain permissible expenses under the PPP. In April of 2020, the Paycheck Protection Program’s second round has secured over $300 billion additional funding. In contrast, Congress authorized only about $284 billion in the third round of the PPP.
Under the Paycheck Protection Program, qualifying small businesses and other eligible entities will be able to receive loans with a maturity of two years and an interest rate of only one percent (1%); however, the Paycheck Protection Program will allow the principal and interest of the loan to be entirely forgiven on the condition that the businesses are able to meet the spending requirements of the program, particularly having to use the proceeds only on certain permissible expenses such as interests on mortgages, payroll costs, rent, and utilities, under a set period of the time. The Paycheck Protection Program also requires that at least 60% of the PPP loan be spent on payroll expenses to be qualified as entirely forgivable.
An individual may obtain a loan from the Paycheck Protection Program by submitting an application for a qualifying small business. The applying small business must be represented by authorized personnel who shall provide certain affirmative certifications and acknowledgment of the PPP rules, apart from the legal documents necessary to prove the company’s eligibility for the PPP bank loans. After submitting the loan applications, the U.S. Small Business Administration will allow a participating lender to inspect said application. If the small business is deemed eligible for the Paycheck Protection Program, the participating lender shall subsequently fund the qualified small business using its own monies.
Announcement, Investigation, and Prosecution
The announcement of the case was made by Acting Assistant Attorney General Nicholas L. McQuaid of the Criminal Division of the Department of Justice, along with United States Attorney for the Western District of New York James P. Kennedy, Special Agent in Charge Stephen Belongia of the Buffalo Field Office of the FBI, Special Agent in Charge William Kalb of the United States Treasury Inspector General for Tax Administration’s Office of Inspector General’s (TIGTA-OIG’s) North East Field Office, Special Agent in Charge Patricia Tarasca of the Federal Deposit Insurance Corporation – Office of Inspector General (FDIC-OIG), and Special Agent in Charge Amaleka McCall-Brathwaite of the Eastern Region of the Small Business Administration’s Office of Inspector General (SBA-OIG). The case was investigated by law enforcement agencies in collaboration, including the FBI, the FDIC-OIG, and the TIGTA-OIG. The prosecution of the case was led by Trial Attorneys Joshua N. DeBold and Matthew Reilly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David J. Rudroff of the U.S. Attorney’s Office for the Western District of New York.
Fraud Section and the Prosecution of COVID19-related Cases
The Department of Justice’s Fraud Section leads the prosecution of the fraudulent schemes involving the Paycheck Protection Program. Throughout the three installments in the program within the previous nine months, the Fraud Section has successfully prosecuted over 100 defendants in more than 70 criminal cases. Through the endless pursuit of justice, the Fraud Section has been able to seize more than $60 million in cash proceeds, along with a significant number of real estate properties and luxury items that were illegally obtained through fraudulent loan applications to the Paycheck Protection Program. Additional information about the proceedings may be accessed through https://www.justice.gov/criminal-fraud/ppp-fraud.
A federal criminal complaint contains allegations that are not evidence of guilt. Therefore, the public is reminded that the defendant, as mentioned above, shall be considered innocent and is entitled to a fair trial in which the prosecution must prove, beyond a reasonable doubt, each essential element of the criminal charges filed. Read more about a PPP federal indictment here.
Contact Details for Additional Information
Individuals who may have any additional knowledge or information about allegations of attempted schemes to defraud the Paycheck Protection Program or any of the COVID19 Relief efforts can report the details to the National Center for Disaster of the Department of Justice via telephone at (866) 720-5721.