DOJ charges five for more than $4M PPP fraud scheme

DOJ charges five for more than $4M PPP fraud scheme
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The Department of Justice (DOJ) on Thursday accused five people of participating in a more than $4 million Paycheck Protection Program (PPP) fraud scheme and using some of the funds to buy luxury vehicles.

Law enforcement arrested all five suspects and took a Range Rover worth about $125,000, jewelry, more than $120,000 in cash and more than $3 million from 10 bank accounts, according to a DOJ press release. 

Darrell Thomas of Johns Creek, Ga., Andre Lee Gaines of Dallas, Ga., Kahlil Gibran Green Sr. of Cleveland, Ohio and Bern Benoit of Burbank, Calif. were charged with conspiracy to commit bank and wire fraud, bank fraud, wire fraud, false statements to a financial institution and money laundering. 

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Authorities also indicted Carla Jackson of Tucker, Ga. on a charge of money laundering. Thomas, Gaines and Jackson were arrested Thursday morning and appeared in court in the afternoon, according to the release. 

The DOJ alleges that all the defendants but Jackson applied for PPP loans for five businesses: Bellator Phront Group Inc. which Thomas owned, Gaines Reservation and travel LLC which Gaines owned, Impact Creations LLC which Green owned, Transportation Management Services Inc. which Benoit owned and Lee Operations Inc. Each company sought $800,000 in loans.

The applications allegedly were fraudulently filled out and made “numerous false and misleading statements about the companies’ number of employees and payroll expenses.” Overall, the companies were approved for more than $4 million in loans.

After receiving the money, the four allegedly transferred the money to secondary bank accounts, including one run by Jackson, who “further distributed the funds.” Thomas bought a 2018 Mercedes-Benz S-Class S65AMG and a 2018 Land Rover Range Rover, authorities said.

The indictment asserts that Thomas, Gaines, Green and Benoit did not make the payroll payments they committed to when accepting the loan. 

The March-passed CARES Act launched the PPP program to assist small businesses struggling with the economic downturn caused by the coronavirus pandemic and its subsequent shutdowns. Those who accepted the PPP were required to spend the money on payroll costs, interest on mortgages, rent and utilities. 

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Under the law, the loan may be forgiven if businesses spend a designated portion of the loan on job retention for an agreed amount of time.

Some members of Congress have called for more oversight of the PPP program in the next round of coronavirus stimulus to prevent these cases of fraud.

The DOJ has already arrested two men on PPP fraud charges who both in separate cases  are accused of buying Lamborghini sports cars with a portion of their loans.