Arrests for Fraudulent PPP Loans, Reality Star Bought Rolex and Rolls Royce

Arrests for Fraudulent PPP Loans

Arrests for Fraudulent PPP Loans, Reality Star Bought Rolex and Rolls Royce

Many businesses across the country have applied and received PPP loans for hundreds of thousands or even millions. But while rushing to issue these loans, verification of the information that was provided by applications wasn’t very thorough. Many loans were probably given out erroneously. “Every dollar stolen from the Paycheck Protection Program comes at the expense of employees and small business owners who are working hard to make it through these difficult times,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division in a press release.

First Case

Last week, two New England businessmen were charged with illegally trying to procure hundreds of thousands of dollars in federal Paycheck Protection Program loans. That was first fraud case in the nation involving the massive relief program loans. Prosecutors charged David A. Staveley, 52, of Andover, Massachusetts, and David Butziger, 51, of Warwick, Rhode Island, with conspiring to seek forgivable loans of nearly $544,000, guaranteed by the Small Business Administration. They claimed to have dozens of employees earning wages at four different entities when, in fact, there were no employees working for any of the businesses.

Reality Star Uses $1.5M to Buy Luxury Items

A reality TV star in Atlanta has been arrested. He applied for a loan for his transportation business Flame Trucking. Maurice Fayne stated his business employed 107 people with an average monthly payroll of $1,490,200. He requested a Paycheck Protection Program loan for over $3 million and received a little over $2 million, officials said. But instead of using the funds for employees, he bought a Rolex, a 5.73 carat diamond ring, leased a Rolls Royce and use the money to pay child support.

Federal agents searched Fayne’s home and seized the jewelry and around $80,000 in cash, including $9,400 Fayne had in his pockets. Fayne’s attorney said there was ‘considerable confusion’ about PPP guidelines, especially if owners could ‘pay themselves a salary’ CNN reports.

Federal investigators have hinted that more arrests are coming, regarding fraudulent PPP loan applications.

Public Companies that Received PPP Loans

Many companies have also been in the news for applying and receiving million in loans. These loans were supposed to be for small businesses. But many bigger companies were able to apply, as long as they had fewer than 500 workers in a single location. These are some of the biggest companies that have received loans. There was nothing illegal about these loans, but some have already returned the funds after social media backlash.

CARES Act and PPP Funds

The CARES Act is a federal law enacted on March 29, 2020. It’s designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief was the authorization of up to $349 billion in forgivable loans to small businesses. These loans were meant for job retention and certain other expenses, through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years with 1% APR. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll.

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