Two Florida men plead guilty to $ 35 million COVID-19 relief fraud program | Takeover bid

Two Florida men pleaded guilty this week in the Northern Ohio District to leading a nationwide program to fraudulently obtain more than $ 35 million in Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security Act (CARES).

According to court documents, James R. Stote, 55, of Hollywood, and Phillip J. Augustin, 52, of Coral Springs, conspired to obtain millions of dollars in fraudulent P3 loans. Augustin and Stote obtained a fraudulent PPP loan for Augustin’s company, Clear Vision Music Group LLC, using forged documents. After submitting this request, Stote and Augustin immediately began working to secure larger P3 loans for themselves and their associates. Stote and Augustin recruited additional PPP loan applicants and prepared and submitted fraudulent loan applications for them in exchange for a share of the loan proceeds. The claims they submitted for all of the program’s loans were based on fake payroll numbers, forged IRS forms, and fake bank statements. They submitted or facilitated at least 79 fraudulent loan applications valued at at least $ 35 million and planned to submit more.

“These convictions, and the many convictions of others involved in this vast conspiracy, demonstrate that people will be held accountable for defrauding the P3 program,” said Deputy Attorney General Kenneth A. Polite Jr. of the Criminal Division. of the Ministry of Justice. “Fraud against PPP programs directly harms taxpayers and undermines public confidence in critical government support during the pandemic. We will continue to fight fraud and ensure that relief from COVID-19 goes to those who deserve it. “

“While many businesses in our communities relied on relief funds to keep their doors open and employees paid, these defendants took advantage of a scheme that stole millions of taxpayer dollars destined for struggling businesses and left them behind. spent generously on themselves, ”said First Assistant to the United States Attorney Michelle M. Baeppler for the Northern District of Ohio. “The theft of public funds will not be tolerated and prosecution for PPP fraud remains a priority for law enforcement. “

Stote and Augustine each pleaded guilty to conspiring to commit wire fraud. They are expected to be sentenced at a later date and each face a maximum sentence of 20 years in prison. A federal district court judge will determine any sentence after considering US sentencing guidelines and other statutory factors.

In addition, Diamond Smith, 37, of Miramar, was sentenced today to 20 months after pleading guilty on August 4 in the Southern District of Florida to conspiring to commit wire fraud. Smith, a recording artist, admitted to securing a PPP loan of $ 426,717 for his company, Throwbackjersey.com LLC, using forged documents and false information. Upon completion of that loan, Smith then sought and obtained another PPP loan of $ 708,065 for his other company, Blue Star Records LLC, using forged documents and false information. Smith admitted to using the proceeds from the PPP loan at the Seminole Hard Rock Hotel and Casino and on luxury items, including a Ferrari. Authorities seized the Ferrari when Smith was arrested. Smith further admitted that he paid Stote and Augustine over $ 250,000 in bribes for their assistance in preparing and submitting fraudulent loan applications. Smith was ordered to pay $ 1,111,345.23 in restitution and $ 1,134,782 in forfeiture in addition to his jail term.

“When the Paycheck Protection Program was implemented over a year ago, our office made a commitment to protect Southern Floridians from those attempting to exploit the Covid-19 pandemic” said U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida. “Our work is not done. We will continue to hold accountable those who wrongly obtain funds to help struggling small businesses survive the current health and economic crisis. “

“From submitting false documents to recruiting others, the accused have gone to great lengths to defraud the Million Dollar Paycheck Protection Program,” said Special Agent in Charge Bryant Jackson of the ‘IRS Criminal Investigation (IRS-CI), Cincinnati Field Office. “The IRS-CI will continue to work with our law enforcement partners to hold accountable those who defraud programs designed to help Americans and struggling businesses. “

“This conviction serves as a deterrent to anyone who commits fraud targeting COVID-19 relief programs,” said Acting Deputy Director Jay Greenberg of the FBI’s Criminal Investigations Division. “Programs like these were created to help individuals during a pandemic, not for fraudsters to profit for personal gain. The FBI will continue to prosecute criminal actors who engage in this activity. “

“Conspiring to fraudulently use SBA program funds is unacceptable,” said Special Agent in Charge Sharon Johnson of the Central Region of the SBA Inspector General’s Office (SBA-OIG). “The OIG will aggressively eliminate fraud to protect the integrity of the SBA’s programs, which are intended to provide vital assistance to small businesses nationwide. I would like to thank the Department of Justice and our law enforcement partners for their dedication and commitment to ensuring that justice is served. ”

A total of 25 people have been charged with their participation in this program in the Northern District of Ohio, the Southern District of Florida and the Central District of North Carolina. To date, 20 of these defendants have been convicted.

The IRS-CI, the FBI, and the SBA-OIG are investigating these cases.

Trial prosecutor Philip Trout of the Fraud Section of the Criminal Division and Assistant U.S. Attorneys Elliot Morrison of the Northern District of Ohio and David Turken and Aimee Jimenez of the Southern District of Florida are continuing these cases.

The Fraud Section leads the Criminal Division’s prosecution of fraud schemes that exploit the PPP. Since the inception of the CARES Act, the Fraud Section has prosecuted over 150 defendants in over 95 criminal cases and seized over $ 75 million in cash from fraudulently obtained PPP funds, as well as numerous real estate and items. luxury goods purchased with such a product. More information can be found at https://www.justice.gov/criminal-fraud/ppp-fraud.

On May 17, 2021, the Attorney General created the COVID-19 Fraud Enforcement Working Group to mobilize the resources of the Department of Justice in partnership with government agencies to strengthen efforts to combat and prevent the pandemic fraud. The Working Group strengthens efforts to investigate and prosecute the most culpable national and international criminal actors and assists agencies responsible for administering relief programs to prevent fraud, among other methods, by scaling up and integrating mechanisms coordination, identifying resources and techniques for uncovering fraudulent actors and their programs, and sharing and leveraging information and knowledge gained from previous enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Enforcement (NCDF) hotline at 866-720 -5721 or via the NCDF web complaint form at https: // www. justice.gov/disaster-fraud/ncdf-disaster-complaint-form.