Federal officials in Georgia have charged 22 people in connection with what they call a fraudulent scheme to obtain approximately $11.1 million in Paycheck Protection Program (PPP) loans.
Those people allegedly used that money to purchase luxury vehicles, jewelry, and other personal items.
This, according to a press release that members of the U.S. Attorney’s Office for the Northern District of Georgia published this week.
Six of the 22 individuals charged, including the scheme’s mastermind, Darrell Thomas, have pleaded guilty, the press release said.
From April 2020 through August 2020, the conspirators in the scheme allegedly submitted, or assisted in the submission of, PPP loan applications on behalf of 14 businesses, seeking loans of approximately $700,000 to $850,000 for each company, the press release said.
“In the loan applications, the defendants certified that each applicant business was in operation on February 15, 2020 and had employees for whom it paid salaries and payroll taxes or paid independent contractors; that the funds would be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments; and that the information provided in the application and in all supporting documents and forms was true and accurate in all material respects,” the press release said.
“The PPP loan applications reported that each business had between 59 and 69 employees and approximately $295,000 to $342,000 in average monthly payroll expenses. To support these payroll figures, each business’s loan application was accompanied by an Internal Revenue Service Form 941, which employers use to report payroll taxes, for each quarter of 2019 and by a bank statement or a spreadsheet reflecting payroll expenses. In reality, however, none of the businesses had employees or payroll expenses. The Form 941s, bank statements, and W2 payroll spreadsheets had all been fabricated. Indeed, some of the supporting documents the businesses submitted were substantively identical, including identical Form 941s, identical bank statements, and W2 payroll spreadsheets where the reported figures were identical but purported employee names had been changed.”
After the PPP loan proceeds were deposited into the businesses’ accounts, the businesses transferred more than $5.5 million of the PPP loan proceeds into accounts that Thomas controlled, purportedly for rental payments and payroll. None of the businesses, however, had any legitimate business with any of the businesses or accounts to which they sent the proceeds, the press release said.
“Based on the investigation, none of the companies allegedly engaged in any business-related transactions or used the PPP loan proceeds for any authorized purposes,” according to the press release.
“Instead, the businesses used the funds for various personal expenses. In connection with the investigation, the United States seized nearly $4 million in PPP loan proceeds, four luxury vehicles, and several jewelry items.”
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