A Florida man has been charged with fraudulently obtaining $2.1 million in COVID-19 relief loans under the Paycheck Protection Program (PPP), the Department of Justice announced on Dec. 29.
Valesky Barosy, 27, of Ft. Lauderdale appeared in federal magistrate court last week. Prosecutors claim that he submitted fraudulent loan applications on behalf of himself and his accomplices seeking more than $4.2 million in PPP loans.
The Paycheck Protection Program is a federal program aimed at helping small businesses survive the COVID-19 pandemic. It was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 29, 2020.
Under the program, Congress authorized up to $349 billion in forgivable loans to small businesses that faced unprecedented economic disruption due to the pandemic. The loans provided an incentive for small companies to keep their employees on the payroll and allowed them to pay for other expenses such as interest on mortgages, rent, and utilities.
In April 2020, Congress authorized over $300 billion in additional PPP funding. The program ended on May 31, 2021.
Barosy falsified the applicant’s prior-year expenses, net profit, and payroll in each of the loan applications, prosecutors said. He also submitted fraudulent IRS tax forms, as per the indictment.
Barosy and his accomplices received a total of $2.1 million in PPP loans from their fraudulent scheme, which he used to purchase a Lamborghini Huracán EVO, Rolex, and Hublot watches, and designer clothing from Louis Vuitton, Gucci, and Chanel, prosecutors allege.
He has been charged with five counts of wire fraud, three counts of money laundering, and one count of aggravated identity theft. If convicted, Barosy faces up to 132 years in prison.
The case is being investigated by the U.S. Secret Service (USSS), Miami, and Assistant U.S. Attorney Jonathan Bailyn is serving as prosecutor.
According to a 2020 analysis of Small Business Administration (SBA) and federal campaign finance data by OpenSecrets.org, individuals working for big law firms and corporations that received PPP loans which were meant for small businesses pumped nearly $2 million into President Joe Biden’s presidential campaign, while former President Donald Trump also benefited from such contributions.
“Vital Pharmaceuticals, the company behind Bang Energy drink, got a PPP loan worth at least $5 million in early April as the program doled out its first batch of loans. Last year, the company gave $250,000 in corporate money to Trump’s preferred super PAC, America First Action,” OpenSecrets.org stated in their July 23 analysis.
“Biden is boosted by Morgan & Morgan, a Florida personal injury law firm whose employees gave $437,000 to his campaign. The firm’s founder hosted an extravagant fundraiser for the former vice president during the early days of his White House bid,” OpenSecrets.org stated.
“Morgan & Morgan, which says it employs more than 500 experienced lawyers, pulled in several PPP loans meant for struggling small businesses. Its Tampa location received a loan worth at least $5 million while its Fort Myers and Jacksonville locations each received loans worth at least $2 million, OpenSecrets.org said.”
The analysis by OpenSecrets.org also highlighted PPP money going to groups backing candidates and causes of both Republican and Democratic political parties.
On May 17, 2021, Attorney General Merrick Garland established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice and prevent pandemic-related fraud.
In December, the USSS issued a statement saying it was investigating more than 900 fraud cases linked to pandemic-related relief funds.