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The U.S. Department of Justice (DOJ) in partnership with different law enforcement and other regulatory agencies remains active and aggressive in detecting, investigating individuals and entities involved in a COVID-relief fraud scheme.

Since the start of the pandemic, state and federal law enforcement and regulatory agencies have already sued a number of individuals and businesses who committed unlawful activities or practices to enrich themselves.

In March 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency financial assistance to millions of American families and businesses suffering due to the impact of COVID-19 pandemic. The law authorized up to $349 billion in forgivable loans to small businesses for payroll, mortgage interest, rent/lease, and utilities, through the Paycheck Protection Program (PPP). The Congress authorized up to $310 billion in additional PPP funding in April.

Five individuals charged for fraudulently obtaining over $4 million in PPP loans

Last Thursday, the Justice Department announced that a grand jury charged five individuals engaged in COVID-19 relief fraud. The defendants were identified as Darrel Thomas, Andree Lee Gaines, and Carla Jackson, residents of Georgia; Kahlil Gibran Green, a resident of Ohio; and Bern Benoit, a resident of California,

According to the indictment, the five defendants allegedly fraudulently obtained more than $4 million in PPP loans and used those funds in part to buy luxury vehicles.

Thomas, Gaines, Green, and Benoit allegedly assisted in the submission or submitted PPP loan applications on behalf of five companies — Bellator Phront Group Inc. (owned by Thomas), Gaines Reservation and Travel LLC (owned by Gaines), Impact Creations LLC (owned by Green), Transportation Management Services, Inc. (owned by Benoit), and Lee Operations LLC.

They allegedly submitted fraudulent loan applications with numerous false and misleading statements about the companies’ number of employees and payroll expenses. They sought $800,000 for each company.

After receiving the PPP funds, Thomas, Gaines, Green, and Benoit transferred the money to secondary bank accounts, including an account controlled by Jackson who further distributed the funds.

Thomas allegedly used the PPP funds to buy a 2018 Mercedes-Benz S-Class S65AMG and a 2018 Land Rover Range Rover.

Days and weeks after receiving the PPP funds, Thomas, Gaines, Green, and Benoit did not make payroll payments, contrary to their claims in the loan applications that they would.

Authorities charged Thomas, Gaines, Green, and Benoit with conspiracy to commit bank and wire fraud, bank fraud, wire fraud, false statements to a financial institution, and money laundering. Jackson has been charged with money laundering.

Nine individuals charged with $24 million COVID-relief fraud scheme

Separately, the Justice Department announced last week that a talent management company and eight others were charged for their involvement in a $24 million COVID-relief fraud scheme.

The defendants were identified as Damion Mckenzie, Andre Clark, Keyaira Bostic, Phillip Augustin, Wyleia Nashon Williams, James Stote, Ross Charno, Deon D. Levy, and Abdul-Azeem Levy.

McKenzie, Clark, Bostic, Augustin, Williams, Stote, and Charno were charged with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud.

Both Deon Levy and Abdul-Azeem Levy were charged with wire fraud and conspiracy to commit wire fraud.

According to Acting Assistant Attorney General Brian Rabbitt of the Justice Department’s Criminal Division, the defendants participated in a nationwide scheme to file at least 90 fraudulent PPP loan applications to receive kickbacks for obtaining the forgivable loans for other co-conspirators.

“These allegations reflect an organized effort by defendants to defraud the SBA’s PPP program on a large scale by stealing funds intended for legitimate small businesses suffering from economic hardships caused by the COVID-19 pandemic. The department and our law enforcement partners will continue to aggressively pursue those who would seek to illegally exploit the ongoing national emergency for their own benefit,” said Acting Assistant AG Rabbit.

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