Federal Crackdown on PPP Fraud Sweeps Up 57 People So Far

By:
Chris Gaetano
Published Date:
Sep 11, 2020
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The Department of Justice announced Paycheck Protection Program (PPP) fraud charges against 57 individuals, including an NFL player, as part of a wide-ranging crackdown on abuse of the popular program. Collectively, according to Acting Assistant Attorney General Brian Rabbitt, the accused fraudsters' efforts represent an attempted theft of over $175 million, with actual losses of about $70 million.

"Unfortunately, almost every crisis brings out not only those who seek to help others, but also those who try to exploit the situation for their own unlawful purposes and financial gain," said Rabbitt.

He said that cases generally fell into one of two categories: individuals—or small groups—who lied about having legitimate businesses, or who claimed they needed PPP money for uses such as paying their workers, but instead used it for themselves; and coordinated criminal rings taking systemic, organized action.

An example of the former is a pair of brothers from New York who are accused of submitting at least eight fraudulent loan applications to obtain nearly $7 million; the DOJ said they made numerous false and misleading statements about their companies' respective business operations and payroll expenses, going so far as to forge documents such as federal tax filings to do so. The DOJ said that the brothers took the money and used it to buy securities, home improvements and a vehicle.

An example of the latter would be the aforementioned case with the NFL player, in which he is one of 10 other alleged co-conspirators who acted under the guidance of talent management company owner Phillip J. Augustin. The manager, who last month was named in a complaint of his own, is said to have recruited participants in the scheme through his company, Clear Vision Music Group. The plan was that Augustin would prepare fraudulent PPP loan applications for them in exchange for a certain percentage of the proceeds. These applications, of which there were ultimately more than 90, were backed by forged bank statements and tax filings to give the impression of a legitimate business.

The New York Jets wide receiver who is accused of taking part in the scheme, Joshua J. Bellamy, is said to have fraudulently obtained a loan of $1.246 million for his own company, Drip Entertainment LLC; the complaint noted that, despite documents doctored to appear otherwise, the company had actually been defunct since 2018. IRS records show that Drip Entertainment did not, in fact, file any Forms 941 for any quarter of 2019 or the first quarter of 2020, and Florida Department of Revenue records show that Drip Entertainment did not report any wages or employees for that same period. Despite this inactivity, the football player still claimed on his loan application that his company had 47 employees, with an average monthly payroll cost of $498,626.

The DOJ said that he spent his loan money on  $104,000 in luxury goods, including purchases at Dior, Gucci, and jewelers; $62,774 for stays at the Seminole Hard Rock Hotel and Casino; and cash withdrawals of over $302,000, among other things.  Bellamy also allegedly sought PPP loans on behalf of his family members and close associates.

Rabbitt, the acting assistant attorney general, said that these cases are just the beginning.

"Now, these 50-plus cases are significant in and of themselves, but you should also know that there is more to come," he said. " Our work is ongoing.  We are not done yet. The agencies represented behind me and prosecutors here in the Criminal Division are working tirelessly to help during this time of national emergency by bringing accountability to those who would victimize the American people.'

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