Dive Brief:
- A Texas man was sentenced on Nov. 29 to 110 months in prison for his scheme to fraudulently obtain and launder proceeds from more than $1.6 million in Paycheck Protection Program loans under the CARES Act, according to the Department of Justice.
- Lee Price III, 30, of Houston, applied for one loan using a dead person's name, and spent PPP funds on a Lamborghini Urus, a Ford F-350 truck, a Rolex watch and to pay off a loan on a residential property, among other purchases, DOJ said.
- PPP loans were introduced early in the pandemic to help small businesses survive COVID-19-related impacts on the economy. The program ended May 31, 2021. The DOJ identified more than half a billion dollars in fraud related to COVID-19 relief programs in a March press release.
Dive Insight:
Price submitted fraudulent PPP loan applications to two different lenders on behalf of three entities: 713 Construction LLC, Price Enterprises Holdings LLC and Price Logistic Services LLC. He pleaded guilty in September to charges of wire fraud and money laundering, according to the DOJ.
Through these loan applications, Price requested over $2.6 million, and ended up obtaining around $1.6 million in PPP loan funds.
To do this, Price misrepresented the number of employees and payroll expenses in each of the PPP loan applications, claiming in one of his applications that Price Enterprises had 50 employees and an average monthly payroll of $375,000, when in reality Price Enterprises actually had no employees on payroll, according to court documents.
He also submitted fraudulent tax records and other materials to support the fake loan applications. This included using a counterfeit Texas driver's license in the name of an Ohio resident who died shortly before one of the applications was submitted, court records show.
About three weeks after receiving the proceeds of the first PPP loan in May 2020, Price paid $85,000 for the Ford truck, according to court records. Then in June, within days of signing for a second loan in the amount of $937,500, Price spent $14,343 for the Rolex and $233,337 for the Lamborghini, according to the records.
Price was ordered to forfeit the truck, car and watch in court records. The DOJ ultimately seized over $700,000 of unspent funds, according to its release.
Since the inception of the CARES Act, the DOJ's Fraud Section has prosecuted over 150 defendants in more than 95 criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.
DOJ's National Center for Disaster Fraud (NCDF) is seeking information about allegations of attempted fraud involving COVID-19, and has set up a hotline at 866-720-5721 for tips. Leads can also be submitted via the NCDF Web Complaint Form.
