South Florida residents sentenced for $28 million PPP fraud scheme
Four South Florida residents were sentenced to prison on Friday for their involvement in a $28 million PPP fraud scheme. The sentences ranged from 15 months in prison to 70 months in prison.
According to the Department of Justice, one of the defendants, a tax preparer, filed around 170 fraudulent Paycheck Protection Program (PPP) loan applications on behalf of companies he controlled and over 100 others, seeking more than $28 million in total. Of these loans, around 33 were funded for approximately $5.5 million. The tax preparer received kickbacks ranging from 12.5 to 25 percent of the PPP loan proceeds.
Federal investigators uncovered the PPP fraud scheme when, at the height of the pandemic, a South Florida man charged with drug dealing applied for and received a $250,000 federal government loan for his liquor store that was supposed to be for businesses struggling during the pandemic. Business owners charged or convicted of a felony offense were ineligible to apply for relief under the CARES Act.
South Florida is a hotbed for COVID loan fraud and the Southern District of Florida prosecutes more fraud cases, particularly CARES Act cases, than anybody else in the country.
Part of the reason for this is that COVID loan fraud crimes leave a paper trail and are easy for authorities to catch. One estimate is that up to $76 billion may have been paid in fraudulent loans with 900 active investigations.
In addition, these bank fraud cases have a 10-year statute of limitations, which is longer than most federal crimes. While a defendant could face a sentence of up to 20 or 30 years in federal prison for COVID loan fraud, the range in the Southern District of Florida has been two to seven years.