The U.S. Department of Justice said in a statement that a man in Southern California has been sentenced to 11 years and three months in prison for loan fraud from the Payment Check Protection Program (PPP).
A California man convicted of a PPP loan fraud scheme
Robert Benlevi, 53, of Encino received a 135-month sentence after his March conviction for bank fraud, false statements to a financial institution and money laundering. Benlevi had been charged with submitting 27 PPP loan applications to four banks between April and June 2020 on behalf of eight Benlevi-owned companies.
According to court documents, Benlevi applied for a total of $ 27 million in forgivable PPP loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Benlevi sought $ 27 million in funding to cover the expenses and received $ 3 million he spent on personal expenses. This includes cash withdrawals, payments on your credit cards, and transfers to other personal and business accounts you controlled. He was also renting an oceanfront apartment in Santa Monica, the Justice Department said.
Through fraudulent applications, Benlevi had claimed that each of his companies had 100 employees and an average monthly payroll of $ 400,000, when in fact the companies had no employees or payroll expenses.
The prosecution’s evidence further showed that Benlevi also filed fabricated IRS documents that falsely claimed that each of the companies had an annual payroll of $ 4.8 million. Following Benlevi’s fraudulent loan applications, three of Benlevi’s companies: 1Stellar Health LLC, Bestways2 Health LLC and Joyous-Health4U LLC raised a total of $ 3 million in PPP funds.
Reduction of PPP scammers
Through the PPP, the U.S. government authorized more than $ 600 billion in forgivable loans to small businesses. The loans were for job retention, and other expenses were spread over three short rounds spread between April 2020 and May 2021. The loans can be fully forgiven if companies spend 60% on payroll, as well. such as when paying interest on a mortgage, rent, and utilities. However, some companies attempted to fraudulently obtain and use the money for unforeseen purposes as part of the program.
PPP fraud is often committed through false statements, “stacking loans” by applying for a PPP loan from multiple lenders, using loan proceeds for inappropriate or unapproved purposes, or providing false statements during PPP loan audits. or fraud investigations.
Recently, a research paper from the University of Texas at Austin, Department of Finance, found that more than 15% of PPP loans or about 1.8 million of the 11.8 million PPP loans showed at least one indication of possible fraud.
Researchers also estimate that $ 76 billion in PPP loans were taken illegally, accounting for nearly 10% of the program budget. Fintech lenders had the highest rate of suspicious PPP loans. They were making about 29% of all PPP loans, but they accounted for more than half of their suspicious loans to borrowers.
COVID-19 Fraud Enforcement Working Group
In an attempt to crack down on PPP fraud in May 2021, the Attorney General established the COVID-19 Fraud Enforcement Working Group. The goal is to pool Department of Justice resources in collaboration with other federal agencies to strengthen efforts to combat and prevent pandemic-related fraud.
Late last year, the Secret Service’s investigations into unemployment insurance and loan fraud from the Payment Check Protection Program (PPP) resulted in the confiscation of more than $ 1.2 billion while they recovered more than $ 2.3 billion from fraudulently obtained funds and the unemployment insurance program.
If you have information about any attempted fraud involving relief from COVID-19, you can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) hotline at 866-720-5721 or by calling NCDF web claim form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
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