Pandemic Pie

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Close-up Of A Businessperson's Hand Giving Cheque To Colleague At Workplace

Ever had a craving for pie? Perhaps apple pie a la mode or pumpkin pie with whipped cream sounds delicious to you at this time of the year. There’s a relatively new flavor of pie that has gained the attention of many unscrupulous individuals – the pandemic pie. (And we’re now hearing more about court cases involving criminals who tried to get a piece of it before it was gone.)

It only took about three months from when the SARS-CoV-2 virus first arrived in the U.S. around January 2020 until the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted on March 29, 2020. It was designed to provide emergency financial assistance to millions of Americans who were suffering the economic effects caused by the COVID-19 pandemic. (In other words, it was a great opportunity for fraudsters to steal money from those who deserved the funds.)

The Paycheck Protection Program (PPP), one source of relief provided by the CARES Act, authorized up to $349 billion in forgivable loans to small businesses. This money was supposed to be used to retain jobs and help pay for certain operational expenses like mortgages, rent, and utilities. In April 2020, Congress authorized an additional $300 billion in funding. (Another large pot of free money, or so thought all the fraudsters.)

Gregory J. Blotnick, 34, of Florida, submitted 21 fraudulent PPP loan applications to 13 lenders before the program ended on May 31, 2021. (My guess is that he spread out his scam to as many lenders as possible to avoid detection.) These false applications, seeking approximately $6.8 million in loans, were for nine purported businesses controlled by Blotnick. (He backed up his requests with more falsified information, including the number of employees, federal tax returns for the supposed nine businesses, and payroll documentation.)

Blotnick’s scheme was relatively lucrative. He received around $4.6 million in PPP funds, then used them to place more than $3 million in losing stock trades. (Your tax dollars at work.)

Blotnick pleaded guilty to an information charging him with one count of wire fraud and one count of money laundering for stealing PPP funds meant for business owners who were struggling during the COVID-19 pandemic. When sentenced, he could receive up to 20 years in prison and a fine of more than $250,000 or twice the gross profit or loss, whichever is greatest. He could also receive up to 10 years in prison and a $250,000 fine, or twice the gross gain to the defendant or gross loss to the victim, whichever is greatest. (There’s no more pandemic pie left, not even a crumb, thanks to this guy.) 

Today’s Fraud of the Day comes from a Department of Justice press release, “New York and Florida Resident Admits to $6.8 Million Paycheck Protection Program Fraud Scheme,” dated October 13, 2021.

NEWARK, N.J. – A dual New York and Florida resident today admitted his role in a scheme to fraudulently obtain federal Paycheck Protection Program (PPP) loans totaling over $6.8 million, Acting U.S. Attorney Rachael A. Honig and Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division announced today.

Gregory J. Blotnick, 34, of Florida, pleaded guilty before U.S. District Judge Brian R. Martinotti to an information charging him with one count of wire fraud and one count of 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.