Former Monmouth County Residents Charged With $3.3M Paycheck Protection Program Fraud Scheme | USAO-NJ
NEWARK, NJ – Two former residents of Monmouth County, New Jersey, now residing in Frisco, Texas, were arrested today for their role in fraudulently obtaining more than $3 million in Federal Protection Program payments paychecks (PPP), announced the American prosecutor Philip R. Sellinger. .
Jean E. Rabbitt, 51, formerly of Farmingdale, New Jersey, is charged by complaint with bank fraud, conspiracy to engage in monetary transactions in property derived from specified illegal activity and engaging in monetary transactions in property derived from a specified illegal activity. Kevin Aguilar, 51, formerly of Farmingdale, is charged by complaint with conspiracy to engage in monetary transactions in property derived from a specified illegal activity and to engage in monetary transactions in property derived from specified illegal activity. Rabbitt and Aguilar are scheduled to make their first appearances by videoconference on March 3, 2022, before U.S. Magistrate Judge Kimberly C. Priest Johnson in the Eastern District of Texas.
According to documents filed in this case and statements made in court:
The CARES Act (Coronavirus Aid, Relief, and Economic Security) is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to millions of Americans suffering from the economic effects caused by the COVID-19 pandemic. One of the sources of relief provided by the CARES Act was the authorization of up to $349 billion in small business forgivable loans for job retention and certain other expenses, through the PPP. . In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows small businesses and other eligible organizations to receive loans with a term of two years and an interest rate of 1%. PPP loan proceeds are to be used by businesses for payroll costs, mortgage interest, rent and utilities. PPP allows for the interest and principal of the PPP loan to be forgiven if the business spends the loan proceeds on these expenses within a specified time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on the expenses. wages. .
Rabbitt submitted fraudulent PPP loan applications on behalf of four companies she controlled. The applications contained fraudulent statements to lenders, including a member of the Federal Home Loan Bank and the Small Business Administration (SBA), including fraudulent payroll and tax records and false certifications as to the number of employees and gross income from Rabbitt’s businesses. According to IRS records, none of the purported tax documents Rabbitt submitted to PPP lenders were in fact filed with the IRS. Other government documents showed that, contrary to fraudulent payroll records and certifications, Rabbitt’s companies did not in fact pay salaries to any employees. Based on Rabbitt’s alleged misrepresentations in loan applications, Rabbitt’s businesses received approximately $3.33 million in federal COVID-19 emergency relief funds earmarked for struggling small businesses.
After Rabbitt’s companies received the PPP loans through fraudulent applications, Aguilar set up shell payroll companies. Rabbitt then wrote checks from Rabbitt’s businesses to the bogus payroll companies, incorrectly indicating on each check that the payments were for payroll. Rabbitt and Aguilar then transferred funds from the shell payroll companies to other companies created by Aguilar. Aguilar and Rabbitt then used the funds to purchase residential properties in Sherman, Texas, and to pay for personal expenses.
Rabbitt also made false and fraudulent statements and used forged and fraudulent documents in support of requests for forgiveness of some of the PPP loans. Based on Rabbitt’s forged and fraudulent certifications and documents, the SBA paid over $2 million to lenders in the fraudulent PPP loans obtained by Rabbitt.
Each count of bank fraud carries a maximum sentence of 30 years in prison and a fine of $1 million. Each count of conspiracy to engage in monetary transactions in property derived from a specified illegal activity and to engage in monetary transactions in property derived from a specified illegal activity is punishable by a maximum sentence of 10 years in prison. Conspiracy to engage in monetary transactions in property derived from a specified illegal activity and to engage in monetary transactions in property derived from a specified illegal activity is punishable by a maximum fine of 250 $000 or twice the defendant’s gross gain or victim’s gross loss, whichever is greater. . The court may impose another fine not exceeding twice the amount of criminal property involved in the transaction.
U.S. Attorney Sellinger credited special agents from the Federal Deposit Insurance Corporation – Office of Inspector General, under Special Agent in Charge Patricia Tarasca in New York; IRS – Criminal Investigation, led by Special Agent in Charge Michael Montanez; Special Agents of the Social Security Administration, Office of Inspector General, under Special Agent in Charge Sharon MacDermott; the postal inspectors of the United States Postal Inspection Service, under the direction of the inspector in charge a.i. Raimundo Marrero; Federal Housing Finance Agency Special Agents, Office of Inspector General, under Special Agent in Charge Robert Manchak; and special agents from the U.S. Attorney’s Office for the District of New Jersey, under the direction of Special Agent in Charge Thomas Mahoney.
The government is represented by Assistant US Attorneys Olajide Araromi and David V. Simunovich of the Government Fraud Unit at the US Attorney’s Office in Newark.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to mobilize Department of Justice resources in partnership with government agencies to scale up enforcement and prevention efforts. pandemic-related fraud. The task force strengthens efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies administering relief programs to prevent fraud, among other methods, by increasing and integrating coordination mechanisms existing ones, identifying resources and techniques to uncover fraudulent actors and their agendas, and sharing and leveraging information and knowledge gained from previous enforcement efforts. For more information about the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about alleged attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Disaster Fraud Center hotline at 866-720 -5721 or through the NCDF’s online complaint form at: https://www.justice. gov/disaster-fraud/ncdf-disaster-complaint-form.
The charges and allegations contained in the complaint are charges only, and the defendants are presumed innocent until proven guilty.