The feds made another arrest related to Paycheck Protection Program (PPP) loan fraud. This time it’s a lawyer facing the charges. Jae H. Choi, who has an office in Fort Lee, New Jersey, was accused of fraudulently obtaining nearly $ 9 million in PPP loans.
Choi was charged with three counts of bank fraud and one count of money laundering. According to the complaint, Choi filed three fraudulent PPP loan applications with three different lenders on behalf of three businesses allegedly providing educational services. The Department of Justice hasn’t released company names, but a LinkedIn profile that matches Choi’s educational and legal information marks him as CEO of Homeschool Buyers Co-op and MathCloud.
Choi allegedly falsely claimed to lenders that the companies had hundreds of employees and paid over $ 3 million in monthly wages. To do this, he reportedly made up the existence of those employees, manipulated bank and tax documents, and forged a driver’s license on applications.
According to the Justice Department, based on those statements, each lender financed the three companies with approximately $ 3 million in PPP loans. As a result, the complaint alleges that Choi received a total of nearly $ 9 million.
The feds say Choi didn’t use PPP loans for those businesses. Instead, they say he used the loan proceeds to pay for personal expenses, including the purchase of a nearly $ 1 million home in Cresskill, New Jersey, and about $ 30,000 in renovations and other improvements. Choi would also have invested millions more in the stock market through an account in his wife’s name.
It is unclear what kind of law Choi practiced prior to his arrest, but a lawyer.com profile indicates that Choi focuses on patent law. According to the New York State Unified Judicial System and the New Jersey courts, Choi has no record of public discipline.
The PPP, which was part of the CARES Act, consists of billions of dollars in repayable loans guaranteed by the Small Business Administration (SBA) intended to keep workers on payroll. But mistakes have been made. A recent House Select Subcommittee report on the Coronavirus crisis reported that more than $ 1 billion in COVID aid went to companies in violation of program rules. Specifically, 10,856 loans (totaling over $ 1 billion) appeared to be multiple loans to the same recipient. The report also found that more than 600 loans (totaling over $ 96 million) went to companies that have been barred or suspended from doing business with the federal government. And there were also more than 350 loans (totaling over $ 195 million) that went to government contractors previously reported by the federal government for performance or integrity issues.
You can read the full report here (download as PDF).
The feds promise there will be more such cases as they investigate the fraud allegations. There have been other high-profile arrests related to PPP loan fraud. In May of this year, David A. Staveley (a / k / a Kurt D. Sanborn) of Andover, Massachusetts, and David Butziger of Warwick, Rhode Island, were charged with conspiring to illegally obtain funds through the loan program. PPP. Shortly after his indictment, Staveley went missing. According to federal authorities, David A. Staveley cut off his GPS tracking device. The US Attorney’s Office said Staveley then faked his own death by faking a suicide with a ticket in his car. He was eventually arrested by the United States Marshal Service in Alpharetta, Georgia on July 23, 2020.
And in July, I filed for the arrest of a Florida man accused of fraudulently obtaining $ 3.9 million in PPP loans and using those funds, in part, to purchase a 2020 Lamborghini Huracan sports car. .
As part of my relationship for these stories, I had a conversation with Jeff Grant, who explained that he understood these kinds of stories all too well: he served nearly fourteen months in federal prison for a white collar crime. That crime was related to improperly borrowing a low-interest SBA loan after 9/11 (similar to PPP loans but without the pardon part). Grant and I discussed the temptation to cheat the system and the consequences (you can hear it here).
This will not be the last of these types of arrests: authorities have indicated that the investigation is ongoing. This particular case has been investigated by the IRS – Criminal Investigation, the United States Postal Inspection Service, the Inspector General’s Small Business Administration Office and the Social Security Administration – Inspector General’s Office.
The government requests that anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form.