In indictments unveiled Thursday in Greenville, South Carolina’s U.S. Attorney Peter McCoy charged seven people with money laundering schemes involving alleged theft from the Paycheck Protection Program of nearly $400,000, plus other fraud totaling more than $750,000.
Those indicted are accused not only of picking the pockets of Uncle Sam and us taxpayers but also of taking scarce funds urgently needed by legitimate small businesses and their employees trying to survive COVID-19 shutdowns.
That’s a particularly heinous crime, as federal law enforcement personnel from Washington to Columbia repeatedly said. We owe thanks to the federal agencies involved, from the Small Business Administration that wrote the checks and sniffed out the alleged fraud to the FBI, Justice Department and Internal Revenue Service. We also thank the U.S. attorney’s office for its aggressive prosecution. The Greenville case was the 50th such round of indictments; more were announced Thursday in Washington.
The federal Paycheck Protection Program was a major Republican contribution to the pandemic relief CARES Act. Between April 3 and Aug. 8, when its funds were exhausted, the program doled out more than $525 billion to help small businesses keep employees on the payroll and weather the shutdown. At least 5.2 million loans were made, averaging about $101,000. PPP would still be useful today, especially in our state’s hard-hit hospitality industry, if congressional gridlock on pandemic relief had not blocked its extension.
In the urgent rush to meet the huge demand for Paycheck Protection Program funds, banks curtailed their normal due diligence, and a large number of fraudulent applications were made. So far, about $175 million in potentially fraudulent claims have been identified, and more are expected to emerge. Claims for $70 million have been prosecuted, and $30 million has been recovered, according to the Justice Department.
Some scammers showed considerable ingenuity in creating false documentation of nonexistent businesses and payrolls. Some of those caught also created incriminating paper trails sniffed out by federal investigators. In a competition for brazen thievery, the Florida man who spent $340,000 of his loan on a new Lamborghini narrowly edges out the team that used its ill-gotten gains to buy a Mercedes, a Ranger Rover and $125,000 of jewelry.
Remember, these dollars were intended to help put food on the table and pay the rent for employees whose businesses had to shut down because of the pandemic.
The Greenville cases have an unusual angle. The investigation started as a federal probe into high-level drug trafficking in the Greenville area involving heroin and methamphetamines. Federal Drug Enforcement Administration agents looking into the issue found that their targets also were engaging in wire fraud and money laundering.
Finance is key for drug networks. “Their money is their lifeline, and without it, their drug distribution activities could not survive. ... Hitting drug traffickers in their pocket is ... crucial,” said Robert Murphy, head of the DEA Atlanta field office.
According to the indictments, Christopher Agard of Marietta, Ga., used his business, Wild Stylz Entertainment, to launder illegal proceeds. He also submitted an allegedly fraudulent PPP loan application using false statements about the business’s employees and payroll expenses, then collected more than $395,000 from the program, effectively denying that money to legitimate businesses and their employees, according to the indictments.
We fully support the federal teams working to identify, arrest and prosecute fraudsters whose actions not only improperly enrich themselves but also hurt others in need during the pandemic.