The men are accused of using fraudulent documents to obtain loans under a program to help businesses hard hit by the coronavirus pandemic.
Two men have been accused of participating in a scheme to defraud the US government of $ 24 million in COVID-19 economic aid, with suspect spending $ 96,000 in funds intended to help struggling small businesses on a Ferrari .
Diamond Blue Smith, 36, a recording artist from Florida, and Tonye C Johnson, 28, a tow company owner in Pennsylvania, were accused wire fraud, bank fraud and conspiracy to commit wire fraud and bank fraud, according to the US Department of Justice.
Smith is accused of using false documents to secure a loan of $ 426,717 for his company, Throwbackjersey.com LLC, from the Paycheck Protection Program. After obtaining this loan, authorities allege that Smith used fraudulent documents to obtain another PPP loan worth $ 708,065 for his other company, Blue Star Records LLC. Smith also reportedly offered to get PPP loans for others in exchange for bribes.
Smith reportedly used the loan money – which was designed to help bail out small businesses affected by the pandemic – for luxury purchases, including the Ferrarri, which was seized by authorities when they arrested Smith this week .
Johnson is accused of using forged documents to secure a loan worth $ 389,627 for his own company, Synergy Towing & Transport LLC, paying part of the loan proceeds to his alleged co-conspirators of the scheme.
The criminal complaint lists 11 alleged co-conspirators in Florida and Ohio. In total, the program involved at least 90 fraudulent requests for PPP loans worth $ 24 million. Some $ 17.4 million in fraudulent loans were approved and funded by financial institutions, according to the Justice Department.
The US government allocated up to $ 349 billion in forgivable loans to small businesses in March under the PPP, under the CARES (Coronavirus Aid, Relief, and Economic Security) law. In April, Congress authorized $ 300 billion in additional funding for the program. By law, PPP loans must be spent on salary costs, mortgage interest, rent, and utilities.
Congressional Democrats and President Trump’s administration remain deadlocked on next round of coronavirus economic relief aid, even as Federal Reserve Chairman Jerome Powell has warned that “too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.