A Texas entrepreneur is learning this lesson the hard way.
(If only he had read my earlier blog post)
On Tuesday, the U.S. Department of Justice announced here that authorities had taken a Houston, Texas man into custody on allegations that he fraudulently obtained more than $1.6 million in Paycheck Protection Program (PPP) loans. The feds charged him with making false statements to a financial institution, wire fraud, bank fraud, and engaging in unlawful monetary transactions.
What exactly, err, allegedly, did this entrepreneur do that was so fraudulent?
Supposedly, two of his companies applied for and received a total of $1.6M in PPP money. The loan applications allegedly asserted both entities each had lots of employee and payroll expenses.
Except, here’s the thing.
According to the charges, neither entity has employees nor pays wages consistent with the amounts claimed in the loan applications. Plus, the government learned that the individual listed as CEO of one of the companies died in April 2020, a month before the PPP application was submitted.
Dude bought a Lamborghini Urus, a Rolex watch, some real estate, and a ***cough*** rather pedestrian 2020 Ford F-350 pickup truck. He also allegedly spent thousands at strip clubs and other Houston night clubs. Perhaps he assumed that champagne rooms and stuffing dollars in stripper G-strings were an excellent way to spend 60% of the PPP funds on payroll expenses, albeit not his own.
But, perhaps, that never crossed his mind.
Either way, let’s not forget that a federal criminal complaint is merely an accusation. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
For the rest of you, if you’re considering a PPP loan, you’d better hurry. The new deadline to apply for a PPP loan is August 8, 2020.
If you wish to begin preparing your application, you can download a copy of the PPP borrower application form (revised June 24, 2020) to see the information that will be requested from you when you apply with a lender.