Fraud, money laundering charges filed against Atlanta PPP borrowers

When the COVID-19 Pandemic halted the world’s largest economy in March of 2020, the U.S. Government swept in to immediately implement relief measures for those significantly impacted by the COVID shutdown.

A stimulus package orchestrated through the CARES Act – the Coronavirus Aid, Relief, and Economic Security Act – identified small businesses and those laid-off as a high priority for aid outlined in the $2.2 trillion plan. 

In an effort to protect and support those small businesses and their employees, one of the programs enacted was the Paycheck Protection Program, or PPP for short. Which just so happened to be a $523 billion program.

Designed to provide loans to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis, the Paycheck Protection Program (PPP) did just that while simultaneously providing $127 million in fraudulent PPP money to grifters. 

According to the Justice Department, an estimated $4 billion may have been fraudulently acquired, which will ultimately take years to be sorted out. 

Case in point, Monica Magdalena Jaworska, 43, and her husband and co-defendant, Tarik Jaafar.  The Ashburn, VA couple collected $1.4 million in PPP funds and were caught just before boarding a flight at JFK Airport heading to Poland. 

Or, Josh Bellamy, the former Chicago Bears and New York Jets wideout currently being tried for fraudulently obtaining a $1.2 million loan from the PPP for his Drip Entertainment company. 

Whether they received money on behalf of fake companies or, in Bellamy’s case, a legitimate business owner who was accused of spending the funds on luxury items for himself rather than paying employees, the evidence was clear:

The PPP loans have provided critical need while simultaneously attracting those looking to take advantage of relief programs. And take advantage of small businesses. 

Small business owners beware – PPP scams 

The Paycheck Protection Program’s simple idea was to allow small business owners to survive the COVID-19 pandemic while also providing pay to their employees. 

The Small Bussines Administration thought the process was simple enough. 

Small business owners would visit the website to match with lenders, express their needs, and then apply for loans to receive funds to continue paying their employees. 

However, with a lack of government oversight and the PPP shelling out $520 billion worth of loans by the application deadline in August of 2020 – many of which are forgivable –  the fraud was more widespread than imaginable. 

There were countless instances of fraudulent applications and misappropriated funds, as Jaworska mentioned above, the Bellamy cases or the Los Angeles based fraud scheme that submitted 35 applications seeking $5.6 million in CARES relief funds. 

But let’s not forget those posing as legitimate businesses in an attempt to get PPP funds!

Posing for PPP funds

Across the country, con artists applied for PPP loans using legitimate, operating businesses’ names and addresses. 

The Treasury Department oversees the PPP program and, in conjunction with the Small Business Administration, only audited loans exceeding $2 million. Factoring in that about 99% of the loan awards were less than $2 million, almost all of the money received little to no oversight. 

This, of course, opened the door for con artists to pose as small businesses. Needing just some very basic information, criminals applied on behalf of legitimate companies for PPP funds across the country. Like the Vinings School of Art located in Chicago who was subject to a PPP loan scam.  

Owner Kara Kapczynski knew something wasn’t right when she got a call from the Small Business Administration’s office asking about her recent PPP loan, a loan she never applied for. 

After applying for the first round of PPP loans, Kapczynski became skeptical about her second application. A $71,000 loan application was filled out on behalf of Kapcynski’s legitimate art school, which unfortunately has occurred all over the country. 

What to watch for if you’re a business owner

Enacting a speed over safeguard approach to get money into communities as fast as possible, the PPP funds were an easy target for fraudsters looking to capitalize on the emergency stimulus plan. 

Knowing that PPP loans make for easy scam opportunities means keeping a vigilant eye out if you’re a small business owner. Criminals need very little information about your business to submit a fake loan application.

An easy sign to spot if you’re a small business owner is a ‘Small Business Administration’ inquiry on your credit that you didn’t make. To issue funds, the Small Business Administration will crosscheck applications. 

If, for some reason, you notice an inquiry or something that looks out of place, act quickly by contacting the SBA. While you are not ultimately responsible for fraudulent applications that may be filed on your behalf, it is a headache you would rather avoid!

Final word

We have all heard the infamous saying, “Cream rises to the top.” However, what is often left off is the second part of that catchy phrase, “And so does the scum.”  

Self-anointed opportunists of all sorts have leveraged the Paycheck Protection Plan in addition to other COVID-19 relief funds to illegally acquire government-backed money and loans, reminding us that even when humanity is doing its best to repair – there are still those looking to take advantage of the help.