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Five Individuals Charged for Allegedly Scamming $1.1 Million from COVID-19 Relief Program

pexels-pixabay-259027-300x200The Department of Justice has announced charges against three Milwaukee men and two Chicago-area men accused of participating in a scheme to file fraudulent loan applications seeking more than $1 million in coronavirus (COVID-19) relief aid.

The defendants named in the indictment are: Thomas Smith, 46, of Milwaukee, Wisconsin; Stephen Smith, 42, of Milwaukee, Wisconsin; Robert Hamilton, 59, of Milwaukee, Wisconsin; Samuel Davis Jr., 40, of Chicago, Illinois; and Jonathan Henley, 52, of Chicago, Illinois. Four of the defendants are charged with bank fraud and money laundering, while Henley is charged with bank fraud only. It is unclear if any of the defendants has acquired legal counsel.

According to the indictment, the defendants are accused of submitting several Paycheck Protection Program (PPP) loan applications to a federally insured bank on behalf of businesses that are not operational. They misrepresented the number of employees and payroll expenses of the businesses and submitted doctored tax documents to support their applications, the indictment claims.

PPP loans are part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was enacted by Congress in March 2020. Over $650 billion worth of forgivable loans were approved to provide emergency financial assistance to American businesses that have been negatively impacted by the coronavirus pandemic. The loans, which are backed by the Small Business Administration, are meant to be used for job retention and the payment of rent, utilities, and mortgages.

The indictment listed Thomas Smith as a registered agent for T&T Holdings. Stephen Smith is an agent for CFA Auto Transport, Complete Fundamentals, and an organizer of New Beginnings Family Services; Hamilton is a registered agent for Glory Transportation; and Davis and Henley’s companies are respectively listed as Davis Development Group and Premier Logistics Solutions.

The listed companies reportedly opened accounts and applied for PPP loans through an unnamed Green Bay-area financial institution in May 2020. They claimed to have monthly payroll expenses of between $62,000 and $97,000, and employee counts of 14 to 38, the indictment alleges. However, records indicate that none of the businesses were active or had any employees at the time the applications were filed.

The defendants allegedly sought roughly $1.1 million in PPP loan funding on behalf of the businesses. Once the loan proceeds were funded, they allegedly started withdrawing the money via cashier’s checks in amounts ranging from $20,000 to $75,000. They also made new deposits at the same bank and at an unnamed Racine credit union and Minneapolis bank, according to the indictment. It is unclear if any of the funds were used for the business expenses listed under the PPP’s terms.

Federal prosecutors across the U.S. have charged dozens of individuals for allegedly attempting to defraud the PPP. Fraud charges of this kind carry serious penalties that can include lengthy prison sentences and stiff fines. Any business owner under investigation for failing to comply with the terms of their PPP loan should immediately seek legal counsel.

South Florida Fraud Defense Attorney

Are you accused of committing COVID-19 relief fraud in South Florida? Contact Brian Silber, P.A. to set up a free initial consultation with one of South Florida’s most experienced fraud defense attorneys.

Source: 10.22.20 Five charged in connection with COVID-19 relief fraud scheme.pdf

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