Thursday, June 03, 2021

PPP Fraud or How to Use the CARES Act to Go To Prison

 If you are one of the thousands of people who fraudulently filed for a Paycheck Protection Program or PPP Loan under the CARES Act, pay attention!  This blog post  is going to explain why you should return the money and turn yourself in.  The CARES Act provided $349 Billion in forgivable loans that a business could use to cover payroll, mortgage interest, rent, lease, or utilities during the trying times of the pandemic.  But many people are assuming they can just steal that money and never pay a penalty.

Let's use as our example the case of Zsa Zsa Bouvier Couch, whose case was just unsealed in the Middle District of Alabama.

Zsa Zsa Bouvier Couch

Zsa Zsa is an entrepreneur in the Montgomery area.  She operated seven businesses, according to the Alabama Secretary of State:

  • Trinity Christian Ministry, LLC, incorporated on 26MAR2008.
  • Kidz Academy Christian Child Care Center, Inc, incorporated as a non-profit on 12JUN2007.
  • Bouvier Hair Boutique LLC, incorporated 22JAN2008.
  • Slim Fit Weight Loss Medical Clinic & Spa I Inc, incorporated 07APR2020.
  • Zsa Zsa's Boutique, LLC, incorporated 02MAY2020.
  • ABC Christian Ministries, LLC, incorporated 22JAN2008.
  • Walters Academy Corporation, incorporated 26MAY1999.
Kidz Academy opened a new Regions Bank checking account on 25JUN2019.
Bouvier Hair opened a new Regions Bank checking account on 07MAY2020.
Slim Fit opened a new Trustmark checking account on 22APR2020.
Kidz Academy opened a new Trustmark checking account on 06MAY2020.

PPP Loan Time!

Then the PPP Loan Applications started.  To apply for a PPP Loan, the applicant has to tell the bank what their average monthly payroll was and how many employees they have on staff.  One of the checks that is used to compare the information on the application to the history of the bank account.  For example, if I regular issue payroll for $20k per month, and claim on the PPP Loan application that I have a $90k per month payroll, I'm going to quickly get caught.  Zsa Zsa perhaps believed that by opening new checking accounts, the bank would be unable to look at her previous payroll information.

On 22APR2020, Zsa Zsa asked Trustmark for $206,041.68, claiming that Slim Fit had 10 employees and an average payroll of $82,416.67.

To complete the application, she had to attest that the business existed on 15FEB2020 and that the received funds would only be used as allowed in the CARES Act.  She also had to state that this was the only PPP Loan she was applying for and that she did not own or manage any other businesses.

Since SlimFit was incorporated AFTER 15FEB2020, (on 22APR2020) that was a pretty easy one to detect.  Opening a new checking account and then applying for a PPP Loan the same day with your new bank is also a sort of risky move ... but ... she got the loan!  For more than she asked for!  $248,125.00!

On 23APR2020, Zsa Zsa asked Trustmark for $122,479.18, claiming that Trinity also had 10 employees, but had an average monthly payroll of $48,991.67.  Winner move attesting TO THE SAME BANK that you don't have any other businesses, when you just filed THE DAY BEFORE for another business.  But ... she got the loan (though only for $95,625.00).

On 23APR2020, Zsa Zsa also asked Trustmark for $186,664.38 for a third business, Kidz Academy.  She claimed they had 10 employees and a monthly payroll of $74,665.75. And ... she got the loan (for $83,437.47.)

Since things were going so well, Zsa Zsa decided to ask Trustmark for $964,371.88 for Zsa Zsa's Boutique.  She claimed she had 30 employees and an average monthly payroll of $385,748.75.  This time, the Alabama Department of Labor notified Trustmark that ZZB had ZERO employees.  When Trustmark informed Zsa Zsa of this, she responded "Just withdraw the application." 

That application was withdrawn on 04MAY2020, but her Kidz Academy PPP loan was approved on 11MAY2020, her Trinity application was approved on 04MAY2020, and her Slim Fit application was approved on 03JUN2020.

So, after stealing $427,187.47 from the US Taxpayers via Trinity Bank, she realized the gig was up at Trinity and decided to start stealing via Regions Bank.

On 05MAY2020, just one day after learning that the Alabama Department of Labor was on to her and having her most audacious PPP Loan request denied, Zsa Zsa switched to Regions Bank and filed a PPP Loan for Kidz Academy.  This time she claimed to have 15 employees with a monthly payroll of $120,000 and asked for $66,700.00.  Regions approved the loan for the full amount.

On 03JUN2020, Zsa Zsa asked Regions for a PPP Loan for Bouvier Hair, claiming that she had 10 employees and $183,600 average monthly payroll.  She asked Regions for $115,800.  Regions approved the loan for the full amount.  

Zsa Zsa's total theft from the US Taxpayers then was $182,500 from Regions + $427,187.47 from Trustmark for a total of $609,687.47.

Time to Go Shopping!

After claiming that she only had one business, Zsa Zsa had two of her PPP Loans deposited into the same bank account at Trustmark.  Then our criminal mastermind paid for an Audi Q3 by sending a wire transfer from the account which was only funded via PPP Loans to the Rusnak Westlake Audi dealership.  She then wrote checks from the account to family members totaling $150,000.00.  She also wrote another $49,200 in checks to family members from one of her other PPP Loan accounts at Trustmark. 

The story in her Regions account was about the same.  She wrote out a $26,997.00 Cashier's Check and used it to pay cash for a Mercedes-Benz A-220 (VIN# WDD3G4EBCKW017692) which she registered to another family member.

Time to Go To Prison!

There were several other interesting purchases made with all of that money, as the Forfeiture requested by the court includes: 
  • a 2019 BMW 330 
  • a 2007 GMC Pickup truck 
  • a 2019 Mercedes Benz A220 
  • a 2017 Audi Q3 SUV 
  • a 2008 Ford Mustang GT 
  • and all the contents of eight bank accounts, $2400 seized when her house was searched and $1180 seized from her purse.

Let's Review . . . 

1. The banks have been encouraged -- HELP BUSINESSES SURVIVE -- if there is fraud, we will figure that out on the back end.  GET THE MONEY OUT THE DOOR and SAVE JOBS.

2. But they WILL FIND YOU.  If the number of employees you claim to have does not match the IRS tax records or the Alabama (or your state's) Department of Labor numbers, YOU WILL GET CAUGHT.

3. When your bank realizes your PPP Loan doesn't match your Payroll expenditures, YOU WILL GET CAUGHT.

4. If you attest (as required) that this is your ONLY PPP LOAN and then you file multiple applications, YOU WILL GET CAUGHT.

5. If you open new bank accounts to avoid payroll matching, the bank will eventually get around to checking that and YOU WILL GET CAUGHT.

6. And lastly, if you take your PPP Loan account and wire money to a car dealer, YOU WILL GET CAUGHT.

Don't be a Zsa Zsa.  If you committed fraud, return the funds and throw yourself on the mercy of the courts.

No comments:

Post a Comment

Trying a new setting. After turning on comments, I got about 20-30 comments per day that were all link spam. Sorry to require login, but the spam was too much.