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COVID Frauds of the Week: More PPP and PPE Fraudsters, and an Update

Posted  September 17, 2020

Attorney General William P. Barr announced the results of his Payroll Protection Program (PPP) Criminal Fraud Enforcement Action this week, and noted that as of August 8, 2020, over 5.2 million loans had been approved, with a total federal expenditure of over $525 billion in federal business support expenditures. The downside is that Paycheck Protection Program fraudsters have cost the government over $70 million in improperly disbursed funds to date, with the submission of fraudulent PPP loan applications seeking over $175 million.

As of August 2020, more than 50 defendants have been charged with PPP fraud, including Darrell Baker, whose indictment was previously highlighted in our COVID Frauds of the Week series. Mr. Baker pleaded guilty last Friday to one count of bank fraud for attempting to defraud a Pennsylvania bank out of $590,000. He managed to withdraw approximately $172,000 before the remainder was frozen by the financial institution. He’s now on the hook for a money judgment of $172,484.40, and has agreed as further part of his plea agreement to forfeit his two Cadillac Escalades, a Dodge Charger, and a Hummer, which means his sister and brother-in-law will need to find another way to get around town. He’s scheduled to appear before US District Judge Laurie J. Michaelson for sentencing on January 14, 2021. (USAO)

Jae H. Choi, 48, a New Jersey attorney with a flair for the dramatic (and an apparent affinity for the number four), submitted four fraudulent PPP loan applications to four lenders on behalf of four “educational services” businesses. In one follow-up email to a lender pushing for faster disbursement of his loan proceeds, Choi stated that he had “watched grown men and women crying,” and that he “sincerely hope[d]” that the email recipient “would never find [himself] in this kind of situation.” In furtherance of his fraud, he fabricated hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications. Three of the four lenders funded three businesses with approximately $3 million in PPP loans for each. With the proceeds, he spent nearly $1 million on the purchase of a Cresskill, NJ home, paid for remodeling and improvements to the tune of $30,000, and invested millions in the stock market through his spouse’s investment account. He was charged by indictment with four counts of bank fraud, four counts of false statements on a loan application, one account of aggravated identity theft, and one count of money laundering. (USAO)

Lola Shalewa Barbara Kasali, 22, of Houston, Texas was taken into custody this week on allegations of fraudulently obtaining more than $1.9 million in PPP loans. She’s charged with making false statements to a financial institution, wire fraud, bank fraud, and engaging in unlawful monetary transactions. She received her funds via at least two fraudulent PPP loan applications on behalf of an entity called Lola’s Level and another in the name of Charm Hair Extensions. Neither of the entities have employees, nor do they pay wages consistent with the claimed amounts. Even though Kasali funneled the funds to four different bank accounts, the authorities were later able to seize the funds. (DOJ; USAO SDTX)

Rounding out this week’s cons is a Park City, Utah man who now faces 20 years in prison for wire fraud based on a scheme to sell millions of nonexistent 1860 N95 masks to a medical company. John Anthony Taylor, 46, is the founder and owner of Positive Marketing, LLC and Wasatch Promotional Products, LLC. Perhaps it was his “positive marketing” approach that empowered him to claim to represent 3M—the 1860 N95 mask manufacturer—and to tout access to a billion masks. He is not, however, a representative of 3M, as he held himself out to be to an undercover FBI agent. Despite lacking the claimed credentials, he cannot be faulted for lack of ambition. In communication with the FBI, he claimed he had contracts for 30 million and 60 million masks for a couple different state governments, had shipped several shipments of said masks, and could broker a deal for 3 million 1860 N95 masks for $5.49 per mask. The FBI was alerted to his activity by a Houston, Texas attorney who questioned Taylor’s veracity. (USAO)

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Tagged in: COVID-19, Financial and Investment Fraud, Government Loan Programs,