From a Lamborghini to a custom Rolex, here are the wildest things business owners bought with their PPP loans
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- The Justice Department has charged many business owners with fraud over their PPP and EIDL loans.
- Convictions relate to sports-car purchases, million-dollar homes, jewelry, and designer handbags.
- The department has prosecuted more than 235 defendants in more than 162 criminal fraud cases.
While the Paycheck Protection Program was considered a successful rescue program by many, it was rife with fraud as many sought to take advantage of the low-barrier application process, federal investigators have found.
As part of the $3 trillion CARES Act, signed into law in March 2020, the Small Business Administration oversaw two federal rescue programs intended to help the 7.5 million US small businesses at risk of closing permanently in the first year of the COVID-19 pandemic.
The Paycheck Protection Program made forgivable loans of up to $10 million available for business owners to cover payroll and certain business expenses. The Small Business Administration awarded nearly $800 billion in PPP loans to 11.47 million businesses.
A similar low-interest program made Economic Injury Disaster Loans of up to $500,000 available to business owners to pay operational expenses. The SBA awarded nearly $390 billion in those loans to 4 million businesses.
Since then, the Justice Department has charged several business owners over accusations that they fraudulently obtained government loans, alleging they never used the funds for eligible purposes, such as employee payrolls or business expenses. In two notable examples, one man pleaded guilty to purchasing a Lamborghini and the Justice Department charged another man over accusations that he bought an alpaca farm with PPP money.
As of October, the Justice Department had prosecuted more than 235 defendants in more than 162 pandemic-related criminal fraud cases, according to a recent report by the US House Select Subcommittee on the Coronavirus Crisis.
Here are the most notable charges from the Justice Department.
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David Hines of Miami pleaded guilty to wire fraud after receiving $3.9 million in fraudulent PPP loans, according to the Justice Department. He was sentenced in May 2021 to more than six years in prison.
According to the indictment documents, Hines did not use the PPP funds for payroll expenses and instead used them to purchase a $318,000 Lamborghini, luxury jewelry, and expensive clothing. Records of his spending include purchases at Saks Fifth Avenue and Miami beach resorts.
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Dinesh Sah of Coppell, Texas, pleaded guilty to wire fraud and money laundering. According to the Justice Department, he obtained $17.3 million in PPP loans after he submitted 15 fraudulent applications and supporting documents. He was sentenced in July 2021 to more than 11 years in prison.
According to the indictment documents, Sah used the PPP funds to purchase properties in Texas, luxury jewelry, a Bentley, a Porsche, a Chevrolet Corvette, and two Cadillacs.
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Twelve people were sentenced and six others pleaded guilty in a fraud and money-laundering scheme in which they applied for and received $12 million in PPP loans and EIDL funds.
Fourteen of the loan applications investigated by the Justice Department claimed that each business had 60 or more employees and an average monthly payroll of roughly $300,000. According to the department, each application used fraudulent IRS forms to substantiate these claims, but none of the businesses had employees.
According to the indictment documents, the defendants did not use the PPP loans for payroll expenses and instead used the funds to buy jewelry, two Range Rovers, an Acura, and a Mercedes-Benz.
Darrell Thomas, identified as the scheme's mastermind by the Justice Department, was sentenced to 15 years in prison. The department has charged a total of 23 people in the scheme.
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Eight California residents were convicted of several charges in relation to a fraud ring that submitted 150 fraudulent PPP and EIDL loan applications using stolen and fake identities.
According to the indictment documents, the group received more than $18 million in government funding and used it to purchase million-dollar homes, gold, jewelry, watches, designer handbags and clothing, cryptocurrencies, and a Harley-Davidson motorcycle.
Richard Ayvazyan, who was identified as the leader of the scheme by the Justice Department, was sentenced to 17 years in prison. Ayvazyan, his wife, Marietta Terabelian, and his sister-in-law Tamara Dadyan ran from law enforcement last summer after their convictions and were arrested in Montenegro in February, NBC News reported.
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Maurice "Mo" Fayne, who appeared on the "Love & Hip Hop Atlanta" reality-TV show, was convicted of conspiracy and wire fraud related to a Ponzi scheme that defrauded more than 20 people who invested in his trucking company, Flame Trucking. He pleaded guilty to bank fraud and making false statements to obtain a PPP loan.
According to the Justice Department, Fayne lied in his PPP application about how many employees worked at his trucking company. According to the indictment documents, he received more than $2 million in government funds and used them to operate his Ponzi scheme, pay child support, buy $85,000 in jewelry (including a custom-made Rolex), lease a Rolls-Royce, and start a business in Arkansas.
In September 2021, Fayne was sentenced to 17 years in prison.
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The Justice Department charged Dana McIntyre of Grafton, Vermont, with wire fraud and money laundering, alleging he received more than $660,000 in fraudulent PPP loans and did not use it for employee payroll.
McIntyre owned and operated the Rasta Pasta Pizzeria in Massachusetts. According to the Justice Department, he inflated the number of employees at his business and his payroll expenses in his PPP application. According to the indictment, McIntyre closed his pizzeria after receiving the government funding and used the PPP loan to purchase an alpaca farm in Vermont, buy vehicles, and fund a radio show about cryptocurrency.
According to what appears to be McIntyre's farm website, he also operates a vacation rental on the property. Guest reviews on the farm's Airbnb profile show bookings as recent as November.
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