FL Man Arrested for $2.5M PPP Fraud

WEDNESDAY, JUNE 15, 2022


According to the U.S. Department of Justice, a Florida man was arrested and charged in connection with allegedly filing a fraudulent loan application to obtain $2.5 million in Paycheck Protection Program (PPP) loan funds.

The accused, Vinicius Santana, 34, is a former Massachusetts resident and owner of a Massachusetts-based painting company, Complete Home Care, LLC (CHC).

What Happened

On the evening of June 6, Santana, who currently resides in Boca Raton, Florida, and formerly of Revere, Massachusetts, was arrested at the Miami International Airport and charged with one count of wire fraud.

He appeared in federal court in Miami on the afternoon of June 7 and is slated to appear in Massachusetts at a later date.

According to the charging documents, in April 2020, Santana submitted four different PPP loan applications on behalf of CHC. The first three applications, in which Santana allegedly listed five employees and an average monthly payroll of between $10,000 and $18,000, were denied.

In the fourth application for CHC, it is alleged that Santana falsely claimed to have 154 employees and an average monthly payroll of $1 million. On May 11, 2020, a bank issued Santana’s company a $2,500,000 loan based on the alleged false representations in the fourth application.

Upon receiving the funds, it is believed that Santana misused the loan to purchase cars and invest in cryptocurrency.

The PPP was an integral part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was passed back in March 2020 in wake of the COVID-19 pandemic to provide emergency financial assistance to help small businesses.

One source of relief provided by the CARES Act was the authorization of forgivable loans to small businesses for job retention and certain approved expenses, through the PPP.

According to the DOJ, the wire fraud charge provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000, or twice the gross gain or loss from the scheme, whichever is greater.

Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case. Currently, the details outlined in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

U.S. Attorney Rachael S. Rollins; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Stephen Donnelly, Acting Special Agent in Charge, Eastern Region, Office of Inspector General for the Board of Governors of the Federal Reserve System; Patricia Tarasca, Special Agent in Charge of the Federal Deposit Insurance Corporation Office of Inspector General, New York Region; and Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division, made the announcement of Santana’s arrest on June 8.

Assistant U.S. Attorneys Benjamin A. Saltzman and Mackenzie A. Queenin of Rollins’ Securities, Financial & Cyber Fraud Unit are prosecuting the case.

Recent PPP Fraud Charges

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 the government to enhance efforts to combat and prevent pandemic-related fraud.

The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.

Last summer, the District of Oregon’s Department of Justice announced that two men pleaded guilty to their role in a scheme to steal funds from the Small Business Administration’s PPP.

On May 1, 2020, Russell Anthony Schort, 39, of Myrtle Creek, Oregon, and his accomplice Andrew Aaron Lloyd, 51, of Lebanon, Oregon, submitted a PPP loan application under Schort’s business name, Schort Lee Construction, to U.S. Bank. The loan application included a false IRS form 944 listing 2019 wages paid of more than $3 million and a fake list of 56 employees and the wages reportedly paid to them as well.

Under false representations, U.S. Bank processed the loan and disbursed more than $600,000 into Schort’s bank account. Three days after the transaction, Schort transferred $307,000 to Lloyd’s bank account, who used the funds to purchase securities through an online brokerage account.

According to reports, however, the construction business front was just one of several applications Lloyd engineered starting in April 2020, having also utilized personally identifiable information of relatives and business associates without their consent, in addition to false business profiles.

In total, Lloyd submitted nine PPP loan applications, six of which were accepted, resulting in a payout of more than $3.4 million. Lloyd also applied for numerous Economic Injury Disaster Loans, of which one was accepted, resulting in an additional $160,000 in payments to Lloyd.

Lloyd then reportedly spent the funds received to purchase real estate and invest in various securities (which increased in value), with more than $1.8 million transferred to his E*TRADE Securities brokerage account.

In January 2021, agents seized Lloyd's brokerage account, which included 15,740 shares of Tesla, Inc. In March, agents seized another account containing more than $660,000 in securities and cash. In total, the securities and cash seized from Lloyd's multiple accounts were valued at more than $11 million.

In July 2021, the U.S. Attorney's Office reported that Lloyd had accepted responsibility for his actions and was recommended a sentence of 61 months in federal prison. Lloyd also agreed to pay more than $3.6 million in restitution and to forfeit more than $11 million in cash and securities and 23 properties that were purchased with PPP funds.

On June 17, 2021, Lloyd pleaded guilty to bank fraud, money laundering and aggravated identity theft. His sentencing was slated for Sept. 9, before U.S. District Court Judge Michael J. McShane.

On Jan. 5, 2021, Schort was charged by criminal complaint with wire fraud, bank fraud and money laundering. On June 8, he was charged by superseding criminal information with bank fraud. Schort faces a maximum sentence of 30 years in prison, a $1 million fine and five years of supervised release. As part of his plea agreement, Schort has also agreed to pay no less than $294,552 in restitution to the U.S. Treasury. He was scheduled to be sentenced on Oct. 21, also before McShane.

Acting U.S. Attorney Scott Erik Asphaug of the District of Oregon made the announcement.

This case was investigated by the FBI with assistance from the SBA Office of Inspector General and IRS Criminal Investigation. It is being prosecuted by Gavin W. Bruce, Assistant U.S. Attorney for the District of Oregon.

In December of the same year, the DOJ announced that a Texas man was sentenced to over nine years in prison for his fraud and money laundering scheme of loans from the PPP.

Between May and July 2020, according to the court document, Lee Price III of Houston applied for multiple PPP loans to two different lenders, acting as a Chief Executive at 713 Construction LLC, Price Enterprises Holdings LLC and Price Logistic Services LLC. In total, Price requested over $2.6 million and received over $1.6 million in PPP loans.

The loan applications included fraudulent tax records and other materials. For the 713 Construction LLC loan, Price applied with a counterfeit Texas driver’s license in the name of an Ohio resident who died prior to the application being submitted.

Price claimed that 713 Construction had 30 employees and an average monthly payroll of $300,981 and that Price Enterprises had 50 employees and an average monthly payroll of $375,000. Both companies had no employees and no payroll.

On May 21, 2020, Price purchased a 2020 Ford F-350 with $85,000 of his first application loan. The next month, he bought a Rolex watch with a price tag of $14,343.13, a 2019 Lamborghini Urus with $233,337.60 and paid off a residential property loan.

In September, Price plead guilty in September to two counts of wire fraud and three counts of engaging in monetary transactions in criminally derived property. The DOJ seized over $700,000 of PPP funds Price obtained, and he was ordered to forfeit the cars and watch.

The Federal Housing Finance Agency Office of Inspector General, the SBA Office of Inspector General and the U.S. Postal Inspection Service investigated the case.

Trial Attorney Andrew Tyler of the Criminal Division’s Fraud Section and Trial Attorneys James Alexander and Matthew Grisier of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case with the assistance of Assistant U.S. Attorney James McAlister of the Southern District of Texas.

   

Tagged categories: COVID-19; Ethics; Fraud; Funding; Good Technical Practice; Government; Laws and litigation; Lawsuits; NA; North America; Program/Project Management; Project Management; Small Business Administration

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