Two Florida men have been jailed after leading a national plan to defraud the $ 100 million Paycheck Protection Program (PPP) in loans.
Florida men convicted of PPP loan fraud scheme
So far, 25 people have been indicted for their part in the plan, and now the U.S. District Court for the Northern District of Ohio has convicted the first man, Phillip J. Augustin, 53, of Coral Springs. , 78 months in prison. . The second man, James Stote, 56, of Hollywood, received a 120-month sentence. Both men had pleaded guilty to conspiracy to commit electronic fraud in an attempt to illegally receive loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief and Security Act (CARES) .
Both men will also serve three years of supervised release, with Stote ordered to pay more than $ 10 million in restitution and another $ 1.1 million in confiscation. Augustin has to pay nearly $ 6 million in restitution and more than $ 272,000 in confiscation.
How the PPP Fraud Scheme Happened
Court documents describe how the fraud scheme came about. It started when Augustin and Stote obtained a fraudulent PPP loan for Augustine’s company, Clear Vision Music Group LLC, by using forged documents. Once this application was submitted, they tried to illegally obtain even bigger PPP loans for them and their partners.
Stote and Augustin began recruiting other scammers to act as PPP loan applicants and helped them prepare and submit fraudulent loan applications in exchange for a portion of the loan proceeds. The additional scammers were identified and contacted by Augustin through the network of business contacts he had acquired as a coach for professional football players.
The success of the illegal applications was based on fake payroll numbers and counterfeit IRS forms, as well as fake bank statements. It is understood that Stote filed or at least facilitated a minimum of 79 fraudulent loan applications, in excess of $ 35 million. Augustin was found responsible for a minimum of 34 fraudulent loan applications, worth more than $ 15 million.
The task Force to remove scammers
The CARES Act is supposed to help small businesses, but it has seen many attempts at fraud since its inception. The Fraud Section of the Criminal Division has so far prosecuted more than 150 defendants in more than 95 criminal cases. They also confiscated more than $ 75 million in cash that had been obtained from fraudulent PPP applications. Numerous real estate and luxury items purchased with illegal income have also been confiscated.
Prosecutions escalated after the attorney general set up the Covid-19 Fraud Enforcement Working Group a year ago to “pool Justice Department resources.” The task force is working with government agencies to combat and prevent fraud related to the SBA’s assistance in alleviating the pandemic.
If you have any information about any attempted fraud or current allegations of PPP-related pandemic fraud related to the Covid-19 pandemic, you can report it to the Department of Justice’s National Disaster Fraud Center website or call its disaster hotline at (866). ) 720-5721.
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