International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Tuesday, September 15, 2020

New York Brothers Charged With COVID-Relief Fraud

Two New York brothers were charged in a criminal complaint unsealed for their alleged participation in a scheme to file fraudulent loan applications seeking nearly $7 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney James P. Kennedy, Jr. of the U.S. Attorney’s Office for the Western District of New York.

Larry Jordan, 42, Lancaster, New York, and Sutukh El, aka Curtis Jordan and Hugo Hurt, 38, of Buffalo, New York, were charged in a complaint filed in the Western District of New York with wire fraud conspiracy.  Both individuals were arrested this morning and are scheduled to appear today before U.S. Magistrate Judge H. Kenneth Schroeder, Jr. in the Western District of New York.

The complaint alleges that Jordan and El conspired to, and did, submit at least eight fraudulent loan applications in an attempt to obtain nearly $7 million.  The complaint also alleges that, in support of the fraudulent loan applications, Jordan and El made numerous false and misleading statements about the companies’ respective business operations and payroll expenses.

The complaint further alleges that the fraudulent loan applications were supported by fake documents, including falsified federal tax filings.  For example, included in one application for 5 Stems Inc was a fraudulent IRS filing that appeared to be the company’s 2019 federal unemployment tax return showing that the company paid nearly $3.3 million in employee wages that year.  In reality, the IRS has no record of such a filing.  

The complaint further alleges that Jordan and El used fraudulently obtained loan proceeds on what appear to be personal expenses, including the purchase of securities, home improvements, and a vehicle.  To date, the government has seized more than $400,000 of the more than $600,000 that Jordan and El obtained in their alleged fraud. 

https://lawprofessors.typepad.com/intfinlaw/2020/09/new-york-brothers-charged-with-covid-relief-fraud.html

AML | Permalink

Comments

Post a comment