Pennsylvania Man Charged With Wire Fraud For Alleged Role In PPP Loan Scheme

The Paycheck Protection Program (PPP), a federal initiative designed to mitigate the disastrous economic effects of the COVID-19 pandemic, helped protect millions of workers in the United States from losing their jobs.  In the months after the program rolled out, investigations began into fraudulent loan applications and instances of misuse of PPP loan funds.  Beginning this summer, federal investigators uncovered a scheme, based in Florida, in which a group of business owners in several states allegedly provided false information in order to obtain loans and then shared the proceeds once they received the loan money.  So far, one person from Pennsylvania has received criminal charges for his alleged role in the scheme.  Like all defendants in criminal cases, he is presumed innocent until proven guilty in a court of law.  If you are facing charges for fraudulent business activities, contact a Pennsylvania financial crimes defense lawyer.

The Paycheck Protection Program and Its Vulnerabilities

The CARES Act, which includes the Paycheck Protection Program, is an emergency measure meant to stave off economic collapse during the pandemic; another of its provisions was the stimulus checks sent to low-income and middle-income Americans, no strings attached.  The PPP was designed to get money into the bank accounts of small businesses as quickly as possible, in order to decrease layoffs and furloughs that would have forced even more people to apply for unemployment.  With its quick application process and its disbursement through local banks, the PPP program was, from its outset, vulnerable to fraud.  There simply was not enough time nor enough personnel to check every piece of information on every application.  The need of small businesses for forgivable or low-interest loans was so pressing, though, that the authors of the CARES Act accepted the risk that they would not be able to catch every single misrepresentation on PPP loan applications.

In the News

On October 1, law enforcement arrested Tonye Johnson of Flourtown.  In the spring, Johnson applied for a PPP loan for his towing company Synergy Transport & Towing, LLC.  The loan amount was $389,627.  Johnson allegedly included false statements on his loan application and gave a portion of the loan amount to others who had worked with him to generate fraudulent PPP loan applications.  The following day, one of his alleged co-conspirators, Diamond Blue Smith, a recording artist from South Florida, was also arrested.  The alleged originator of the scam is Phillip Augustin of Florida, who allegedly recruited two business owners from Pennsylvania and at least eight from Florida to obtain PPP funds by making false statements.  Johnson and his co-defendants face federal criminal charges of bank fraud, wire fraud, and conspiracy to commit bank fraud and wire fraud.

Contact an Attorney Today for Help

If you made a mistake on a loan application and are now facing charges for fraud, contact a Pittsburgh white collar crime lawyer.  All defendants in criminal cases have the right to representation by a professional attorney.  Contact the law offices of Gary E. Gerson about your case.

Source:

irs.gov/compliance/criminal-investigation/florida-recording-artist-and-pennsylvania-man-charged-in-24-million-covid-relief-fraud-scheme