Justice Department charges 57 people with attempting to defraud PPP small business relief program

The Justice Department has charged 57 people since May with trying to steal more than $175 million from the Paycheck Protection Program designed to help Americans during the coronavirus pandemic, a department official said on Thursday.

Acting Assistant Attorney General Brian Rabbitt said on Thursday that coordinated criminal rings have worked to defraud the program. 

‘The involvement of these rings isn’t surprising, but it is particularly troubling to us here at the department, we will be focusing on these types of cases, going forward,’ he said at a news conference.

Investigators say that some of those involved in the scams flaunted the ill-gotten funds, using them to buy exotic cars and expensive homes.

The PPP is a $669 billion business loan program established to help small businesses keep paying their staff and meet business expenses during lockdowns in the coronavirus pandemic.

Though many small businesses praise the program, saying it kept them from going under, there have been multiple allegations of abuse, with some borrowers splashing out the bailout funds on luxury lifestyles. 

Rabbitt said that the more than 50 suspects arrested on fraud charges had tried to access more than $175 million in PPP funds, and successfully received more than $70 million. 

‘Through our swift efforts to date, we have been able to recover or freeze more than $30 million in PPP funds,’ Rabbitt said. He said that number would grow as the feds liquidated assets purchased with stolen funds.

Rabbitt said that in just the past day, federal agents had busted criminal rings in Miami and Buffalo, New York, charging multiple defendants with PPP fraud.

Miami appears to be a particular hotspot for relief fund fraud scams. In one case in Miami, a man was accused of using PPP funds to buy a Lamborghini sports car and other luxury items. 

David T. Hines, 29, from Miami, allegedly obtained $4 million in Covid-19 relief funds after applying for PPP loans for small businesses.

He claimed that he had hundreds of employees across four companies – Unified Relocation Solutions, Promaster Movers, Cash-in Holdings LLC and We pack Moving LLC – and that he needed $13 million to keep paying them. 

In reality, prosecutors say he had 12 employees and that his business ‘inflows and outflows’ were around $200,000 a month. 

In another case, Lee Price III, 29, from Houston, is believed to have spent PPP money on luxury items including a Lamborghini, real estate and splashed some of the cash for his own amusement at area strip clubs.

Price is charged with making false statements to a financial institution, wire fraud, bank fraud and engaging in unlawful monetary transactions.

And last month, Jean Fleuridor, 41, and Hasan Brown, 44, were charged in South Florida with using fake identities and a network of shell companies to fraudulently obtain more than $3 million in PPP funds. 

U.S. lawmakers and independent watchdogs have in recent weeks warned of widespread abuse and fraud in the PPP, a program under which banks dished out government-backed funds to small business borrowers hurt by pandemic shutdowns.

Just last week, a key congressional panel said it had identified tens of thousands of PPP loans worth billions of dollars that may have been subject to fraud, waste and abuse, including by companies that were ineligible or that broke the rules by taking more than one loan.

The Small Business Administration, which administered the PPP, said in July that JPMorgan was the largest lender to the program by loan value, dishing out 270,000 loans worth nearly $30 billion.

Now, JPMorgan Chase is investigating employees and customers who may have been involved in the misuse of PPP funds, according to an internal memo. 

The bank said it had found cases of customers ‘misusing Paycheck Protection Program loans, unemployment benefits and other government programs,’ according to the memo, which was verified by a bank spokeswoman.

‘Some employees have fallen short, too,’ according to the memo, which was sent to staff by the bank’s top operating committee. ‘We are doing all we can to identify those instances, and cooperate with law enforcement where appropriate.’

The SBA has also warned of ‘strong indicators of widespread potential fraud’ in its economic disaster loan program.