COVID Feature: Once A Fraudster Always A Fraudster

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A Salt Lake City, Utah rental company owner, who was previously convicted of securities fraud and communications fraud, pleaded guilty in federal court to fraudulently applying for loans through the Paycheck Protection Program (PPP). (You think he would have learned his lesson after the first conviction.)  

Michael Dourous pleaded guilty to two counts of bank fraud, two counts of making a false statement to a bank and money laundering. (Perhaps he was bored with his regular fraud gig and wanted to jump on the COVID-19 fraud bandwagon.) 

PPP loans are government funded loans approved through the Small Business Administration (SBA) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. These loans are meant to relieve the financial strain put on small businesses because of the coronavirus pandemic.

PPP loans are forgivable if they are used to retain employees, meet payroll, and for other business expenses. (They are not forgivable if they are used for the wrong reasons, as today’s fraudster did.)  

Dourous filled out fraudulent PPP loan applications for his company, Epic Rentals, which rents cars, off-road vehicles, and camp trailers. He lied on his application by inflating the amount of his payroll and number of employees. Dorous also stated that he had never been convicted of a felony despite being convicted of securities fraud and communications fraud in 2017. (He conveniently left out that one minor detail.)  

Epic Rentals was originally granted a $198,800 PPP loan by Zions Bank before they further inspected Dourous’ application and cancelled the company’s funding. Dourous transferred his ownership interest to his son as a reaction to being rejected by Zions Bank. (He was determined to get a loan one way or another despite not being entitled to anything.)  

Listing his son as a “straw” owner, Dourous made another PPP loan application through Cache Valley Bank. He falsely claimed that he needed to maintain his monthly payroll of $95,636 and that he had nine employees. In reality, his payroll was significantly lower, and he only had six employees. (It appears his number one priority was taking care of himself, not his employees.)  

Cache Valley Bank approved a $239,091 loan for Epic Rentals, $95,000 of which Dorous’ son transferred to his father’s personal bank account. Additionally, a $20,000 payroll check was made out to Dorous from Epic Rentals’ bank account. It wasn’t long before Dorous pleaded guilty to one count of money laundering. (Some stains just don’t come out in the wash.)  

The fraudulent loans Epic Rentals obtained demonstrate the abhorrent behavior of fraudsters at the expense of American taxpayers. The money dispersed from the loans was intended to help businesses and their employees who were struggling financially, not bankroll the personal expenses of a fraudster. 

When Dourous is sentenced in November, he faces up to 30 years in prison for each of the bank fraud and false statement to a bank charges. He also faces up to10 years for the money laundering charge and could be forced to pay a fine of $1 million. (Seems like a fair price to pay for taking money out of the hands of the poor and disenfranchised.) 

If you suspect you are a victim of COVID-19 fraud or believe someone is committing fraud, contact the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or submit a NCDF Web Complaint Form.

Today’s Fraud of the Day comes from an article, “Utah rental company owner admits to Paycheck Protection Program fraud,” published by Deseret News on September 2, 2020.

SALT LAKE CITY — A South Jordan rental company owner previously convicted for fraud has admitted in federal court to illegally obtaining a Paycheck Protection Program loan through the coronavirus relief bill.

Michael Leroi Douros, 64, pleaded guilty to two counts of bank fraud, two counts of making a false statement to a bank and money laundering.

 

 

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.