Two brothers, Larry Jordan, 42, of Lancaster, New York, and Sutukh El, aka Curtis Jordan and Hugo Hurt, 38, of Buffalo, New York, have been charged in a federal criminal complaint unsealed connected to a scheme to file fraudulent applications seeking nearly $7 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  The complaint was filed in the Western District of New York alleging wire fraud conspiracy.Jordan and El issued “numerous false and misleading statements about the companies’ respective business operations and payroll expenses,” according to the Department of Justice, and the filing further states, “the loan applications were supported by fake documents, including falsified federal tax filings.”  The brothers used the funds received – more than $600,000 – to purchase securities, home improvements, and a vehicle.  To date, the DOJ has seized $400,000 of the $600,000.  The brothers will each face up to twenty years in prison if convicted.

Photo by Travis Essinger on Unsplash

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted on March 29, 2020, by the Trump administration to provide emergency financial assistance to Americans economically impacted by the COVID-19 pandemic.  As part of the CARES Act, up to $349 billion can be issued in forgivable loans to small businesses for job retention and other day-to-day expenses.  The PPP allows businesses to receive loans with a maturity of two years and an interest rate of one percent.The Department of Justice has brought more than forty cases involving false applications for more than $170 million, and the Small Business Administration’s inspector general’s office says it has “initiated hundreds of cases involving potential fraud.”“These indictments are only the tip of the iceberg regarding fraud in the PPP program,” said Tim Stretton, a policy analyst with the Project on Government Oversight.Court records for the majority of the indictments clearly showed how individuals used the money secured to fund their payrolls so they could set income aside for personal purchases.  They wired millions to their personal accounts and to friends and family, according to investigators.  Some, like the New York brothers, purchased high-end material items as well.The DOJ is working with banks, the Small Business Administration, the Treasury Department, the Postal Service, the Internal Revenue Service and others to gather and analyze data from the loan applications for red flags.  JPMorgan Chase, which distributed more than $29 billion in PPP loans, recently provided a statement that it has found some employees and customers had misused the federal aid money.  “We are doing all we can to identify those instances and cooperate with law enforcement where appropriate,” bank officials said.A Treasury Department spokesperson responded to the findings, “Any program of this scope and size will encounter issues, and we have moved quickly to respond as they arise.  The loan forgiveness process currently under way seeks to address data inaccuracies and other matters.  In addition, all loans are undergoing an automated review and all loans over $2 million will undergo a manual review.  Furthermore, any loan may be selected for a manual eligibility or forgiveness review.”

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New York Brothers Charged With COVID-Relief FraudRolls-Royces, Rolexes and rowhouses: Feds crack down on small business loan fraudJustice Dept. Announces Dozens of Fraud Charges in Small-Business Aid Program