California Man Sentenced to 11 Years for $27 Million PPP Loan Fraud


The U.S. Division of Justice mentioned in a press release a  Southern California man has been sentenced to 11 years and three months in jail over Paycheck Safety Program (PPP) mortgage fraud.



California Man Sentenced for PPP Mortgage Fraud Scheme

Robert Benlevi, 53, of Encino acquired a 135-month sentence following his March conviction for financial institution fraud, making false statements to a monetary establishment, and cash laundering. Benlevi had been charged for submitting 27 PPP mortgage functions to 4 banks between April and June 2020 on behalf of eight firms owned by Benlevi.

In response to courtroom paperwork, Benlevi sought a complete of $27 million in forgivable PPP loans assured by the Small Enterprise Administration (SBA) beneath the Coronavirus Help, Reduction, and Financial Safety (CARES) Act.

Benlevi sought $27 million in funding to satisfy bills and acquired $3 million that he spent on private bills. This consists of money withdrawals, funds on his bank cards, and transfers to different private and enterprise accounts he managed. He was additionally renting an oceanfront condo in Santa Monica, the Justice Division mentioned.

By way of the fraudulent functions, Benlevi had claimed that every of his firms had 100 workers and averaged a month-to-month payroll of $400,000, when in reality that the businesses didn’t have any workers or payroll bills.

The prosecution’s proof additional confirmed that Benlevi additionally submitted fabricated IRS paperwork falsely stating that every of the businesses had an annual payroll of $4.8 million. Primarily based on Benlevi’s fraudulent mortgage functions, three of Benlevi’s firms: 1Stellar Well being LLC, Bestways2 Well being LLC, and Joyous-Health4U LLC obtained a complete of $3 million in PPP funds.

Clamping Down of PPP Fraudsters

By way of the PPP, the US authorities approved over $600 billion in forgivable loans to small companies. The loans have been for job retention, and different bills have been distributed in three brief rounds unfold between April 2020 and Could 2021. The loans could be totally forgiven if companies spend 60% of it on payroll in addition to paying curiosity for a mortgage, lease, and utilities. Nonetheless, some companies tried to fraudulently receive and use the cash for functions not meant as a part of this system.

Usually PPP fraud is dedicated by means of false statements, ‘mortgage stacking’ by making use of for a PPP mortgage cash from a number of lenders, utilizing the mortgage proceeds for improper or unapproved functions, or offering false statements throughout PPP mortgage audits or fraud investigations.

Lately a analysis paper on the College of Texas at Austin – Division of Finance – discovered that greater than 15% of PPP loans or round 1.8 million of the PPP’s 11.8 million loans confirmed not less than one indication of potential fraud.

The researchers additionally estimate that $76 billion in PPP loans was taken illicitly – amounting to virtually 10% of this system’s finances. Fintech lenders had the very best price of suspicious PPP loans. They have been making round 29% of all PPP loans however accounted for greater than half of its suspicious loans to debtors.

COVID-19 Fraud Enforcement Activity Pressure

In a bid to clamp down on PPP fraud, in Could 2021, the Lawyer Basic established the COVID-19 Fraud Enforcement Activity Pressure. The purpose is to marshal the sources of the Division of Justice in partnership with different federal businesses to bolster efforts to fight and stop pandemic-related fraud.

Late final yr the Secret Service investigations into unemployment insurance coverage and Paycheck Safety Program (PPP) mortgage fraud resulted within the seizure of greater than $1.2 billion whereas recuperating greater than $2.3 billion of fraudulently obtained funds, and the Unemployment Insurance coverage program.

If in case you have any data on any tried fraud involving COVID-19 aid you may report it by calling the Division of Justice’s Nationwide Heart for Catastrophe Fraud (NCDF) Hotline at 866-720-5721 or by means of the NCDF Net Grievance Kind at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

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Picture: Depositphotos


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