Federal Government Seizes $ 1 Million Mercedes Benz Under Alleged COVID-19 Business Loan Program
GRAND RAPIDS, MI – The government is seeking forfeiture of $ 1.1 million after two men in the Grand Rapids area allegedly set up businesses to receive coronavirus relief funds for businesses devastated by the pandemic.
The two “associates”, who have not been charged, are said to have “laundered the funds by disguising the withdrawals as” payroll “for friends and family members posing as” workers “, wrote the Assistant US Attorney Joel Fauson in a request for confiscation of funds. as well as a Mercedes Benz.
IRS-Criminal Investigation is investigating the case.
One of the alleged companies that received the funds “had no employees, no business, no income and no payroll in 2019 or the first quarter of 2020,” Fauson wrote.
One of the two men allegedly used $ 16,307 to pay off a defaulting credit card and jewelry, court records show.
He provided false information – he said he had 52 employees, a monthly payroll of $ 317,877 – to MBE Capital Partners in a request for a loan-forgiveness of $ 795,000, the government said.
The second man, who also submitted a loan application to MBE, said he had 37 employees, a monthly payroll of $ 280,150 and was using his residence for a business address, Fauson wrote.
He asked for $ 700,000 to cover expenses for 2.5 months, but had no employees, business operations or payroll in 2019 or early 2020, the government said.
After the government seized $ 1.1 million in October, the second man filed returns for the past four years to obtain a reputable restoration certificate from the state of Michigan, the government said.
Funding was provided by the Paycheck Protection Program (PPP) under the Coronavirus Help, Relief and Economic Security Act, or the CARES Act. It provided $ 349 billion in forgivable loans to keep jobs and pay for other expenses. Another $ 300 billion was then authorized by Congress.
To be eligible for a PPP loan, an eligible small business must submit an application and demonstrate its eligibility, including monthly payroll charges and the number of workers, which are used to calculate loans. The applicant must also certify that the proceeds will be used to retain workers, pay mortgage interest or utility charges.
Applicants certify that they can be held liable if funds are used for unauthorized purposes.
The funds, guaranteed by the US Small Business Administration, are provided by financial institutions. The lender provides business information to the SBA.
The federal prosecutor said the two men had issued checks, obtained cashier’s checks and withdrawn money to access “the proceeds of the fraudulently obtained PPP loan”.
They “used the money for themselves and gave it to friends and family.”
This included the second man buying a 2011 Mercedes Benz for $ 11,500 in one hundred dollar bills, the prosecutor wrote. He told the seller, a local business, that he would take care of the paperwork, but that it was still in the name of the previous owner when it was seized in a search warrant on October 27, according to court records.
Forfeiture challenges must be made within 35 days of a March 3 notice. No complaints were made.