What is PPP?

The Cares Act established the Paycheck Protection Program (PPP). The program made nearly $650 billion in loans available to small businesses so they could pay up to eight weeks of payroll costs. The funds may also be used to pay interest on healthcare benefits, mortgages, rent, utilities, and interest on existing debt obligations. In addition to businesses, non-profits, the self-employed, and independent contractors may also be eligible.

One of the key benefits of the PPP is that the interest and principal on the loan may be entirely forgiven if the business spent the loan proceeds on appropriate items within a designated period of time, and used a certain percentage of the proceeds for payroll expenses.

PPP Fraud

PPP fraud occurs where PPP loans are fraudulently obtained or used for improper purposes. To date, the federal government has charged several persons for millions of dollars’ worth of fraudulent use.

Here’s an example, with the names changed. The following conduct is alleged, not yet proven in court. The defendant, named Wilson, recruited five businesses (defendant businesses), offering to obtain a PPP loan for them, even though they didn’t qualify for it. With Wilson’s help, the defendant businesses submitted fraudulent PPP loan applications, in which they each requested $300,000 in loans.

The applications made fraudulent statements, claiming a payroll history that did not exist. The PPP loans were approved and funds were deposited into the defendant businesses’ accounts. Each of the defendant businesses received $300,000 – for which they did not quality under Paycheck Protection Program.

Furthermore, once they received the proceeds, they used the funds for non-qualified, non-business-related, purposes. For example, they made checks out to people who did not even work for them.

For his services, Wilson received a percentage of the loan amount each defendant business received. However, FBI investigators caught up with him. He was charged with several counts of conspiracy to commit bank fraud, making false statements to a federally-insured bank, and money laundering. In addition to the criminal counts, forfeiture of hundreds of thousands of dollars was sought by federal
prosecutors.

Get Help Today

The Cares Act and the PPP are well-intentioned responses to the financial disasters that small businesses have suffered due to COVID-19. While no doubt there has been PPP fraud, the problem is that the federal government has broad overreaching investigatory and prosecutorial powers. Sometimes this means that an innocent person or business accidentally becomes entangled in a federal investigation and
is unfairly charged.

It can happen to you. Even though you have done your best, and exercised all due diligence to honestly request PPP funds, and used them in accordance with your understanding of their intended purpose, it’s possible you made a mistake.

So, if you get caught up in this web, you’ll need an experienced criminal defense lawyer to represent you. Don’t delay and get the help you need today. Contact Arkady Bukh, a nationally recognized New York criminal defense attorney.

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Manhattan District Attorney Robert M. Morgenthau announced today that an Upper West Side woman, ADELA HOLZER, has been indicted for stealing more than $50,000 in an immigration scam. HOLZER claimed to have influential friends in Congress who would pass private immigration relief bills for her so that immigrants could receive permanent residence.

The indictment stems from complaints made to the New York City Police Department, the District Attorney’s Community Affairs Unit and the Special Prosecutions Bureau about HOLZER taking money from immigrants without producing any results. Between October 1995 and April 25, 2001, HOLZER, using the name ADELA ROSIAN, offered to use her connections in Congress to get private bills passed on behalf of twenty people named in the indictment. They were told that for fees of $2000 to $2700, plus processing, the Congress of the United States would pass bills granting them permanent residence in the United States. The investigation is continuing as to other victims.

Mr. Morgenthau said, “Private immigration relief bills can be proposed by members of the Congress to provide specific relief for extraordinary problems. In the last six years, only 29 were enacted. HOLZER had promised far more than 29 to her victims who have been identified. We have established a hotline for people who have been victimized to call: 212 335-8980.”

The investigation revealed that the victims received receipts for their fees and were warned that the procedure would take between two months and a year. Some were asked to produce medical reports, photographs and other personal information. Many were told that they would be travelling to Washington, DC to meet the Member of Congress who had sponsored their private bill. Some were charged for tickets for their trip and given instructions on how to dress for the occasion. None of the victims ever received anything for their money and are now pursuing changes in their immigration status through other channels.

HOLZER was charged with two counts of Scheme to Defraud in the First Degree, four counts of Grand Larceny in the Third Degree and fifteen counts of Grand Larceny in the Fourth Degree. She will be arraigned today in New York State Supreme Court.

Mr. Morgenthau would like to thank: Det. Rafael Nieves, Lt. Gerold Frank and Sgt. Kevin Rosengrant of the 26th Precinct; Det. Sandra Rubino of the Special Victims Squad; P.O. Nicholas Biancoviso of NYPD/HIDTA; and Freddy Sanchez Leon, Defensoria Del Pueblo Del Equador .

The case is being prosecuted by Assistant District Attorney Tracy Cole who is assigned to the District Attorney’s Major Offense Career Criminal Program, under the supervision of Allen J. Frazer, Bureau Chief and Connie Fernandez, Deputy Bureau Chief. Deputy Chief Investigator Thomas Jackson of the District Attorney’s Investigation Unit under the supervision of Chief Investigator Joe Pennisi participated in the investigation.

Grand Larceny in the Third Degree is a D Felony punishable by up to seven years in prison. Grand Larceny in the Fourth Degree and Scheme to Defraud in the First Degree are E Felonies punishable by up to four years in prison.

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