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The Middleman

Russian hacker hacking the server in the dark
Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

Who is a middleman? A middleman plays the role of an intermediary in a distribution or transaction chain who facilitates interaction between the involved parties. A middleman will earn a fee or commission in return for services rendered in matching buyers and sellers. Rafael Martinez, CEO of MBE Capital Partners was the middleman COVID-19 Paycheck Protection Program loans. But when it comes to Martinez, a more apt description of middleman might be the definition by Benjamin Disraeli: “It is well known what a middleman is: he is a man who bamboozles one party and plunders the other.” Which is exactly what Martinez did.

Banks acted as gatekeepers for the PPP program, shepherding small businesses through the application process. And Martinez wanted in. In order to qualify as a non-bank lender for PPP loans, Martinez used false representations and documents with his fraudulent application to the U.S. Small Business Administration (SBA) for his company, MBE Capital Partners.

As a result of the above fraudulent misrepresentations of his company, Martinez became an approved PPP lender and issued approximately $823 million in PPP loans to approximately 36,600 business. Do you think he carefully vetted those loans? Fraudsters don’t stop fraudsters if they can benefit from it themselves. Heck, Martinez even fraudulently obtained a PPP loan of approximately $283,764 for his own company. It didn’t matter to him who got the loans. These loans earned Martinez a total of approximately $71.3 million in loan processing fees.

Martinez spent the proceeds from his criminal conduct on, among other things, the purchase of a villa in the Dominican Republic for over $10 million, a $3.5 million mansion located in Franklin Lakes, New Jersey, a chartered jet service, and several luxury vehicles, including a 2018 Porsche 911 Turbo, a 2017 Ferrari 488 Spider, a 2017 Bentley Continental GT, a BMW 750, and a 1962 Mercedes Benz 190. All will be going to the government for restitution. Martinez pled guilty on March 23, 2023 to wire fraud.

Kudos to the IRS in their involvement with this case.

Today’s Fraud Of The Day is based on article “CEO Of PPP Lender MBE Capital Pleads Guilty To Fraudulent Loan And Lender Applications” published by Shore News on March 23, 2023

Rafael Martinez, CEO of MBE Capital Partners, pled guilty today to conspiring to commit wire fraud in connection with loan and lender applications submitted through the Paycheck Protection Program (PPP) administered by the U.S. Small Business Administration (SBA).

Martinez used false documents to secure hundreds of millions of dollars in capital for PPP loans and ultimately collected over $71 million in lender fees.

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