Funds disseminated through this program are subject to Louisiana state income tax. They. Created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program has lent out $755 billion to businesses as of April 11. Even if the debt is cleared, the loans can end up wreaking havoc on individuals and businesses credit scores. However, not everyone taking part in the federal program was looking to keep their business doors open. Linda Miller, the deputy executive director of the Pandemic Response Accountability Committee, told Federal News Radio in September, My guess is when were all said and done, [the fraud rate is] going to be significantly higher than 5% in the case of the CARES Act. If it is just 5% of the combined $957 billion in Paycheck Protection Program loans and Economic Injury Disaster loans and advance grants, that would still be about $48 billion in fraud. If a company is eligible for a loan and submits certifications in good faith, that company will have nothing to fear from the Civil Division. The Department of Justice, and in particular my office here in the Middle District of Louisiana, is committed to investigating and prosecuting those who abuse the system for personal gain and will use every resource at our disposal to protect those federal dollars and the businesses they are intended to help. Find out how you can get involved and stay up to date with our work. Lock The scandal is whats legal, not whats illegal.. The DOJ says this ill-gotten money was in many cases used to buy luxury personal items like cars, homes, vacation trips, and jewelry. In remarks before the U.S. Chamber of Commerce, an influential business lobbying group, last June before the SBA released partial data identifying Paycheck Protection Program recipients of loans above $150,000, then-Principal Deputy Assistant Attorney General Ethan P. Davis said that with the administrations decision to release that information, some have predicted more qui tams as a result., Davis then said, Let me be clear. And if theyre not interested in prosecuting, for whatever reason, we dont further pursue it at that time., Many of the cases are moving quickly, despite their complexity. Have a question about Government Services? Act 12 of the 2020 First Extraordinary Session of the Louisiana Legislature provided for a one-time $250 rebate for eligible workers earning $50,000 per year or less, who spent at least 200 hours responding to or mitigating the COVID-19 crisis from March 22, 2020, through May 14, 2020. The PPP loans are forgivable under certain conditions and the loan forgiveness is not taxable income for federal tax purposes. Who in Louisiana got Paycheck Protection Program loans during the pandemic? Louisiana Department of Revenue Identity Theft Affidavit, Louisiana Workforce Commission Suspected Fraud Form. As of late March, the department has obtained 48 convictions. One St. Andrews Plaza - New York, NY 10007, Three Family Members Arrested for Misrepresenting Employee Payroll Figures to Receive COVID-19 Loan Funds for Chain of Family-Owned Nail Salons in New York Metropolitan Area and Other Businesses, James Margolin, Nicholas Biase Gaetz has denied the allegations and Greenberg has pleaded not guilty, although Greenbergs attorney and a prosecutor have said in court that he may be striking a plea deal soon. 107 of the cases, accused individuals allegedly falsified payroll documentation to justify either getting a loan or getting a bigger loan than they were eligible for; 93 of the cases, accused individuals allegedly created fake tax documents used for verifying details in loan applications; 41 of the cases, accused individuals allegedly created bogus companies to get loans; 28 of the cases, accused individuals allegedly used defunct companies to get loans; 20 of the cases, accused individuals used stolen identities or aliases while applying for loans; 12 of the cases, accused individuals allegedly falsified ownership of existing legitimate businesses; 28 of the cases, accused individuals also obtained Economic Injury Disaster loans (some of these individuals have been accused of fraudulently obtaining these loans. The three Economic Injury Disaster loans Greenberg obtained should have triggered red flags galore. POGO was unable to reach Edwards before publication. What happens when the watchdog tasked with overseeing the most powerful law enforcement agency in the country doesnt do its job? Nick Schwellenbach Based on the data, between $5,589,989,154 and $10,528,439,154 have been loaned through the Payroll Protection Program to businesses in Louisiana. The DOJ says this ill-gotten money was in many cases used to buy luxury personal items like cars, homes, vacation trips, and jewelry. EVERY charged $45.00 to $120.00 from the individuals she recruited to prepare and submit the fraudulent PPP application. The DOJ says falsified tax records were submitted and in some cases, stolen personal information was also used in these attempts to defraud the PPP. Unlike the previous round of the PPP, loan guaranty approval is now contingent on passing SBA fraud checks, Treasurys Do Not Pay database, and public records, the fact sheet states. My feeling is that despite the fraud, the program helped far, far, far more of my people than it hurt, said Kennedy. An estimated 1% of that 2009 stimulus was lost to fraud (some claim the rate is even lower than that). The Department of Justice says in Feb. 2021, Gray created a scheme to defraud a lender and the United States, through the Small Business Administration, by filing false applications for PPP. In the three decades since the laws passage, there have been only six whistleblower settlements involving FIRREA, yielding $19.9 billion in recoveries, but only $9.3 million in rewards to whistleblowers, according to Whistleblower Network News. My directive to SBA and to the Department of Justice will be to work with our state attorneys general, work with local DHS, work with local sheriffs, and make sure people understand if you steal money, these are these are finite resources, said Kennedy. And these cases are just the beginning. He said that lenders have been extremely cooperative during investigations and their suspicious activity reports have been very useful.. The SBA has very broad rules, very, very large leeway on what the lender had to request from the bar to get that guarantee secure, said the SBA Louisiana District Director Michael Ricks. Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs. Barbershops were one of the most common businesses to apply. Banks and other lenders have been filing a huge number of suspicious activity reports to the Treasury Departments Financial Crimes Enforcement Network (better known as FinCEN) related to the Paycheck Protection Program and the Economic Injury Disaster Loan program. All rights reserved. (WAFB) - Since the Paycheck Protection Program (PPP) launched to help businesses pay their employees to prevent great losses due to the COVID-19 pandemic, some people have of course tried to exploit the program and defraud the federal government of money. But, in contrast to the False Claims Act where the reward is a minimum 10% of the recovery, FIRREAs whistleblower reward is capped at $1.6 million. At the request of WAFB, the Louisiana Board of Barber Examiners also searched their apprentice, student, barber, and shop records for those eight names and addresses, and came up empty as well. For much of 2020, the agency also issued grants of up to $10,000 under the program that do not have to be repaid by eligible recipients. Firm estimates of fraud related to CARES Act spending, including the Paycheck Protection Program and the Economic Injury Disaster Loan program, may not be available until many more cases are brought and more analysis has been conductedpotentially years away. According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court: The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. NGUYEN, VICTORIA HO, and DAT HO are members of a family that owns a chain of over 15 nail salons called Victoria Nails & Spa and other companies (the Victoria Companies) in or around the New York metropolitan area, including the Bronx, Brooklyn, and Long Island. More due diligence on the part of lenders or the Small Business Administration could have prevented at least some instances of fraud, especially when applicants appear to have inflated or fabricated payroll expenses or used defunct or bogus companies to illicitly obtain loans. NGUYEN and DAT HO will be presented in United States District Court for the Eastern District of New York in connection with these and other unrelated charges. With more time, we might have been able to implement some preemptive fraud measures, but we knew there would be some fraud, said Kennedy. The disaster loan programs strongest internal control is the ability to receive directly from the IRS recent tax transcripts, wrote James Rivera, head of the SBAs Office of Disaster Assistance, last fall. 217,332 TOTAL PPP LOANS. Babysitter arrested after 5-year-old fatally shot by 6-year-old cousin. One case involved applications for hundreds of allegedly fraudulent Economic Injury Disaster loans and at least a $1.3 million loss to the federal government. Even if the Justice Department declines to join a case, the whistleblower and their private counsel can continue to pursue it. They often involve obtaining and then piecing together often-complex financial, payroll, and tax records for individuals and companies, and sifting through other evidence. Rabbitt noted the unparalleled speed with which these cases have been investigated and prosecuted.. According to the Board of Barber Examiners, to legally run a barbershop, an owner must have a business license and a barber license if they are cutting hair even if that business is run out of a home. Saintvils attorney declined to comment. On January 11, in the final days of the Trump administration, the Small Business Administration began processing a new round of Paycheck Protection Program loans. We are concerned only with actionable fraud. He added that, in selecting enforcement targets, we will follow the law, and we will not pursue companies that access CARES Act programs in good faith and in compliance with the rules.. to fraudulently obtain the loan money. I want to thank the U.S. Attorneys Office and our law enforcement partners for their dedication and commitment to seeing justice served., FBI Assistant Director William F. Sweeney Jr said: The benefits offered by the CARES Act for PPP loans were established to help small businesses survive during the pandemic. Does something look fishy to you? This table shows the top 5 industries in Louisiana by number . If Congress amends the underutilized Program Fraud Civil Remedies Act, efforts by inspectors general to fight fraud in pandemic related spending would be enhanced, according to Horowitzs testimony. Copyright 2020 WAFB. First Home Bank approved the $8.4 million loan, among the less than 0.1% of Paycheck Protection Program loans this large or larger (the maximum is $10 million). That story of corruption inside SBA has been overshadowed by other criminal allegations against Greenberg, notably child sex trafficking charges, and a scandal that might bring down a member of Congress. But because the Department of Justice has made PPP and EIDL a priority we are seeing results from DOJ rather quickly in a lot of our investigations., Others in government have also remarked on how fast many of these cases Louisiana PPP loan fraud cases may be initiated by employees of banks who disperse PPP funds in Louisiana, employees of companies who have received CARES Act aid in Louisiana, or any other individual who has inside information on a PPP loan fraud case originating in Louisiana. The Department of Justice confirms they are looking into reports of PPP fraud across the nation. SOUTHERN MAGNOLIA LANDSCAPING LLC. As former federal prosecutor Tarek Helou told the Wall Street Journal, The scandal is whats legal, not whats illegal., Lenders may also be more likely to face civil enforcement than criminal enforcement. Help us crowdsource fraud detection in the PPP program! The SBA Employee would and did use her access to the SBAs computer systems and her access to EIDLs to manipulate the status of EIDLs to trigger the system to extend funding for EIDLs submitted for the benefit for Joel Micah Greenberg, the indictment alleges. New Orleans, Louisiana 70130. One percent of the recovery acts $501 billion in spending would be about $5 billion. EVERY prepared and submitted false and fraudulent PPP sole proprietor loan applications via various online portals including, but not limited, to Blueacorn. complaint (20-mag-12908). This Office was one of the districts affected by the SolarWinds intrusion. Does something look fishy to you? & Byron Henderson This March, the Government Accountability Office revealed that 4 months after SBA started using a system to approve Economic Injury Disaster loans in batches, agency officials realized this system contained alerts that should have been reviewed by loan officers, but had not been. In fraud cases where there is no apparent misuse of a loan, civil enforcement may be more likely than criminal prosecution. Aqeel used some of the proceeds to purchase a Lamborghini sports car, according to the Justice Department. The cases involve attempts to steal a total of more than $175 million from the program, with actual losses to the federal government totaling more than $70 million, the DOJ reports. And there is a lot of gray area in the Paycheck Protection Program, partly because the Small Business Administrations rules for the program changed repeatedly and were unclear, and because Congress created loose criteria for loan eligibility and allowed applicants to self-certify their information. *** For media inquiries, contact: BATON ROUGE, La. The cash injection and potentially forgivable loans were . If the borrower can prove they used the money to pay employees and eligible expenses, they can ask the SBA for loan forgiveness. Congress reversed course when it passed a new law on December 27, which authorized more coronavirus loans. In less than six months, more than 50 people have been charged with allegedly committing fraud in connection with the program. There are many potential cases the Justice Department may not prosecute. Normally, our agents work a contract or procurement fraud case those can take several years to investigate, Grossman said. The Veterans Administration, Office of the Inspector General, is an active member of the PRAC Fraud Task Force. Those who suspect PPP fraud or may have been a victim of such fraud should contact the National Center for Disaster Fraud (NCDF) hotline at 866-720-5721. The PPP loan forgiveness, Fairs, Festivals, and Other Special Events, The Importance of Protecting Client Tax Information, 2022 Practitioner Tax Update Seminar Schedule, Update Suspicious activity reports for small business loan fraud continued at levels far higher than normal through the end of 2020, according to POGOs review of federal data. POGOs analysis of the first full years worth of Paycheck Protection Program fraud cases found that in at least: Some of these cases involve multiple defendants. Data analysts at the inspector generals office have been combing through Paycheck Protection Program and Economic Injury Disaster loan data to look for markers of potential fraud, such as repeat loan applicants from the same physical addresses, Grossman told POGO. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. In Louisiana, a federal grand jury recently indicted a Plaquemine woman named Lestreonia Rodrigue on fraud charges. We expect to go to trial because of the serious nature of this matter.. Yet if there is sufficient evidence, the government can still seize stolen money even in the absence of criminal charges. In connection with loan applications for COVID-19 relief available from the Paycheck Protection Program (PPP) of the SBA, the defendants falsely and grossly overstated the number of employees and payroll at their nail salons and other businesses through fraudulent and doctored payroll and tax records in order to obtain larger loans. The PPP was developed to ease the pain of COVID-19 economic restraints on working Americans. But such gaps can create ambiguities that muddy the waters in overseeing spending., Still, much can be done with the data that does exist. The Justice Department brought civil claims against the company under both the False Claims Act and Financial Institutions Reform, Recovery and Enforcement Act. In addition, the defendants falsely listed the same employees in applications for different nail salons to support the loan amounts applied for, and some purported employees were listed as employees of as many as seven different nail salons during the same time period. However, a check of public records for business licenses with the Secretary of State office revealed no active business licenses for those eight individuals. Two of the companies, Symbiont Retailers and Horizon Enterprises, were not in good standing before the Paycheck Protection Program began. Complaints can also be filed online here. GOODWILL INDUSTRIES OF NORTH LOUISIANA INC. According to a court filing signed by a Secret Service agent, a family of four was behind a scheme Name Jobs Reported Current Loan Loan Forgiveness; Amount ($) Date Approved Amount ($) Date; CONQUEST COMPLETION SERVICES, LLC: 129: 6,940,800: July 30, 2020: 7,069,157 The payments are refundable tax credits and are not considered taxable income for federal or state tax purposes. Public Information Director The DOJ says falsified tax records were submitted and in some cases, stolen personal information was also used in these attempts to defraud the PPP. The prosecution of this case is being handled by Assistant United States Attorney Brian M. Klebba, Chief of the Financial Crimes Unit, and Assistant United States Attorney Edward Rivera, COVID-19 Fraud Coordinator. to give the federal government time to investigate and evaluate the complaint before it becomes public. Please click here for further information. A .gov website belongs to an official government organization in the United States. Public Service Announcement on Sexual Assault in Public Housing. And these cases are just the beginning. On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The cases involve attempts to steal a total of more than $175 million from the program, with actual losses to the federal government totaling more than $70 million, the DOJ reports. You can search the SBA's entire PPP loan data below. The Small Business Administration distributed 5.8 million advance grants worth $20 billion last year (despite the name, these are not loans that have to be repaid). Government Accountability Office revealed, according to Shear of the Government Accountability Office, the Justice Department unveiled new charges, Greenberg bribed an unnamed Small Business Administration insider, according to the Government Accountability Office, 5.8 million advance grants worth $20 billion, underutilized Program Fraud Civil Remedies Act, Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), first settlement in a Paycheck Protection Program civil enforcement case, remarks before the U.S. Chamber of Commerce, revamped the Paycheck Protection Program loan application, for the Pandemic Response Accountability Committee, Lamborghinis, Strip Clubs, Bogus Companies, and Lies, Spike in Suspected Business Loan Fraud Reports Coincided with Paycheck Protection Program, How a Ukrainian Oligarchs Companies Got Paycheck Protection Program Loans. Whistleblowers Said This Company Is a Fake Small Business. Those who suspect PPP fraud or may have been a victim of such fraud should contact the National Center for Disaster Fraud (NCDF) hotline at 866-720-5721. They have never said they won't seek prison time for below a minimum dollar amount. All rights reserved. The Justice Department has brought criminal charges against at least 209 individuals in 119 cases related to Paycheck Protection Program (PPP) fraud since banks and other lenders began processing loan applications on behalf of the Small Business Administration on April 3, 2020. Generally, cases where there is any substantial gray areasuch as a lack of unambiguous evidence of fraud or when it wasnt clear what a government rule requiredare far more likely to lead to civil enforcement, or to no enforcement. Not all the blame can be placed at the Small Business Administrations feet. The Justice Department has accused numerous defendants of using Paycheck Protection Program loans for unlawful purposes, such as purchasing private planes, sports cars, and taking pricey trips to Las Vegas casinos. [1] As the introductory phrase signifies, the entirety of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation. Investigators determined there were at least 110 PPP sole proprietor loan applications in and around the Thibodeaux, Louisiana area and they all had the same invoices and federal tax forms (Schedule C) with the same business name and amounts. Joshua Edwards, the supposed vice president of ASLAN International Ministry, is accused of submitting fake payroll, tax, and financial documentation in support of the loan application. (WAFB) - Since the Paycheck Protection Program (PPP) launched to help businesses pay their employees to prevent great losses due to the COVID-19 pandemic, some people have. You know, is it something that they should have done? Based on the fraudulent PPP loan applications submitted by NGUYEN, VICTORIA HO, and DAT HO, a total of more than $13 million in PPP loans were approved for the Victoria Companies and approximately $7.8 million in loan proceeds were disbursed into bank accounts controlled by NGUYEN, DAT HO, and other family members. According to the MITRE Corporation, a mismatched zip code or insufficient award description doesnt seem particularly egregious. Aqeel and others in the scheme allegedly used loan funds to pay individuals they claimed were employees but were actually fake employees, according to a court filing. Director for the Louisiana SBA District Office Michael Ricks said while that information may raise some red flags on the surface, he explained that not complying with an industrys licensing requirements does not necessarily disqualify someone from being eligible for a PPP loan. These cases further highlight the ways individuals appear to have taken advantage of lax oversight in the program. The number of potentially questionable loans approved through these programs is vast, as will be the task of determining how many of those loans were fraudulent or otherwise improper. 6 AVG COMPANY SIZE. Horowitz, the Justice Departments inspector general, recently testified to a House panel examining COVID-19 loan fraud that a legislative reform could help address the problem of fraud in smaller dollar amounts. The case led to criminal charges, including aggravated identify theft, filed in Texas in February. However, both Kennedy and Ricks say the good the program did far outweigh any possible fraud. Lenders approved that amount for eight people, seven of whom got checks. If approved, the SBA pays the lender back using federal funds. On June 28, 2020, the day loan applications were filed for the two companies, Greenberg reinstated the companies with Floridas state government since they had been administratively dissolved years prior to the February 2020 eligibility cutoff. Law enforcement insiders say many more pandemic loan fraud cases will be brought in the months and years ahead. The case against EVERY began as a result of a referral from the COVID-19 Pandemic Response Accountability Committee (PRAC) regarding possible fraudulent Paycheck Protection Program loans (PPP). In Louisiana, a federal grand jury recently indicted a Plaquemine woman named Lestreonia Rodrigue on fraud charges. Gibsland Bank & Trust Company. Two people were approved for that amount twice, and one of those people got paid twice. When the government spends money, taxpayers deserve to know how it was spent, Clarion Ledger Editor Marlon A. Walker says. The only way you can reverse those things is by understanding the metrics behind it and to have real goals around them.. The amounts varied from less than $2,000 to more than $20,000. Both the U.S. Attorneys Office and the Louisiana Attorney General have encouraged the community to report suspected fraud. 66625. I dont know why it is that that some people take advantage of a program like this in a time of crisis. Many believe a high percentage of these grants were stolen, but some federal prosecutors with heavy caseloads may find it hard to justify The PPP was developed to ease the pain of COVID-19 economic restraints on working Americans. 9,060 loans. All totaled, in that city of 43,000 people lenders approved $1.3 million dollars just for barbershop owners. Data analysis could also help the agency assess potential policy changes, and the Biden administration made some changes to make access to relief more equitable earlier this year. I urge anyone who believes he or she is a victim of this type of fraud to report it to the National Center for Disaster Fraud," said US Attorney Brandon Fremin. This case was brought in New Orleans, Louisiana. You have to understand from the lenders perspective, really, theyre just looking at income. The rebates, funded by the CARES Act, Act 311 of the 2020 Regular Session of the Louisiana Legislature allocated federal CARES Act funds to provide grants of up to $15,000 to eligible small businesses through a program administered by the Louisiana Department of Treasury. The Department of Justice (DOJ) says as of Aug. 8, more than 5.2 million forgivable loans have been approved, at a total of more than $525 billion. The PPP loan forgiveness is not subject to Louisiana state income tax. POGO has sought additional data from the Small Business Administration, and to improve data collection. (212) 637-2600, Human Trafficking & Child Sexual Exploitation, Department of Justice Harassment Prevention Resource, Download Ngoc Manh Nguyen et al. While not all of these new reports can be attributed to the government relief effort, they are a sizeable share of the increase., Similarly, a February report by the Pandemic Response Accountability Committee stated that Identity theft is on the rise and has been exploited by bad actors to obtain pandemic response funds, such as unemployment insurance benefits, PPP loans, and EIDLs., Grossman told POGO, There are also PPP and EIDL cases were aware of that are being investigated by state and local authorities, because my agents out in the field get calls from state police and local police departments, where they have received complaints from citizens on identity theft, for example.. Complaints can also be filed online here. 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