Somerset County man charged with $860K Paycheck Protection Program and Economic Injury Disaster Loan fraud scheme
NORTH PLAINFIELD, NJ (Somerset County) – A Somerset County man was arrested Thursday for his role in fraudulently obtaining over $860,000 in federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loan payments (EIDL), according to U.S. Attorney Philip R. Sellinger.
Butherde Darius, 49, of North Plainfield is charged by complaint with one count of bank fraud, one count of wire fraud, and four counts of money laundering. Darius was scheduled to make his initial appearance by videoconference Thursday afternoon before U.S. Magistrate Judge Michael A. Hammer, Sellinger said.
According to documents filed in this case and statements made in court, the Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.
Darius submitted fraudulent PPP and EIDL loan applications on behalf of his purported business, Fabulous Appetizers LLC. The applications contained fraudulent representations to the lenders, including a federal home loan member bank, and the Small Business Administration (SBA), including bogus tax information from the IRS and certifications as to the number of employees and gross revenue of Darius’s business.
According to IRS records, many of the purported tax documents Darius submitted were never in fact filed with the IRS and Darius fabricated the existence of employees and the revenue of his business. Based on Darius’s alleged misrepresentations in his loan applications, he received approximately $862,000 in federal COVID-19 emergency relief funds meant for distressed small businesses. Darius then spent the proceeds on personal expenses, including hotels and airfare, and made cash withdrawals of over $58,000.
The count of bank fraud carries a maximum penalty of 30 years in prison and a fine of $1 million; each count of wire fraud carries a maximum penalty of 20 years in prison; and each count of money laundering carries a maximum penalty of 10 years in prison. Both the wire fraud and money laundering counts carry a maximum fine of $250,000 or twice the gross gain to the defendant or gross loss to the victim, whichever is greatest, Sellinger said.
