A Somerset County man admitted fraudulently obtaining over $850,000 in federal Paycheck Protection Program (PPP) loans as another New Jersey, resident was sentenced to 41 months in prison for his role in fraudulently obtaining PPP, Economic Injury Disaster Loans (EIDL), and unemployment benefits, as well as illegally possessing a firearm.
Butherde Darius, 50, of North Plainfield, New Jersey, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court on Nov. 21, 2022, to an information charging him with one count of conspiracy to commit bank fraud, and one count of money laundering.
Darius confessed that he conspired with at least one individual to submit a fraudulent PPP loan application to a lender on behalf of a purported business that he controlled, obtaining over $850,000. He engaged in various financial transactions with the fraudulently obtained loan proceeds.
The application Darius and his conspirator submitted contained fraudulent representations to the lender – a Federal Home Loan Bank member – and the SBA, including bogus federal tax documents purportedly from the IRS. Darius also fabricated the existence of employees and wages paid through the purported businesses.
According to IRS records, however, none of the purported tax documents that were submitted in support of the loan applications were ever filed with the IRS.
Darius’ loan application for his purported business was approved for $852,000 in federal COVID-19 emergency relief funds meant for distressed small businesses but he then used a portion of the proceeds for various personal expenses.
In the other case, Stephen Bennett, 46, of Berlin, New Jersey, previously pleaded guilty before U.S. District Judge Karen M. Williams to an information charging him with one count of bank fraud conspiracy, one count of wire fraud, and one count of being a felon in possession of a firearm. Judge Williams imposed the sentence on Nov. 21, 2022, in Camden federal court.
According to documents filed in this case and statements made in court, Bennett conspired with Rhonda Thomas, 38, of Sicklerville, New Jersey, in 2020, to submit one PPP application and one EIDL application for a company controlled by Bennett.
The applications stated that the company had 16 employees, gross revenues of $1.73 million, and an average monthly payroll of $144,000, when in fact the company had no employees, revenue, or payroll.
Bennett and Thomas also submitted forged tax forms and altered bank statements as part of the PPP loan application. Based on the misrepresentations, the loans were approved in the amount of $510,000.
Bennett paid kickbacks of over $150,000 to Thomas and used the rest of the fraudulently obtained PPP and EIDL loan proceeds to pay for personal expenses.
Also in 2020, Bennett defrauded the Pennsylvania Department of Labor by submitting 74 unemployment insurance claims under a temporary federal unemployment insurance program that provided benefits for individuals who were not eligible for other types of unemployment, such those who were self-employed, independent contractors or gig economy workers.
Bennett collected personal identification information (PII), including names, residential addresses, and Social Security numbers, of other individuals and used the PII to submit fraudulent applications for unemployment benefits, resulting in the payment of $425,339 in benefits to Bennett.
In May 2021, law enforcement officials executing a search warrant at Bennett’s home found a .9 millimeter semiautomatic pistol with no serial number (commonly referred to as a “ghost gun”) and a magazine loaded with 16 rounds of ammunition. Bennett is a previously convicted felon.
In addition to the prison term, Judge Williams sentenced Bennett to five years of supervised release, fined him $15,000, and ordered him to pay restitution of $942,141.
Thomas pleaded pleaded guilty before Judge Williams on June 28, 2022, to an information charging her with one count of bank fraud conspiracy and one count of money laundering and is scheduled to be sentenced on Dec. 16, 2022.
In March 2020, Congress passed a $2.2 trillion economic relief bill known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act ostensibly to provide emergency financial assistance to the millions of Americans who were suffering the economic effects caused by the COVID-19 pandemic but the law lacked adequate financial controls to protect taxpayers from outright theft or devious political machinations.
Progressive champion Lisa McCormick, who was challenging incumbent Rep. Bonnie Watson Coleman, said Democrats in Congress voted to give Republican President Donald Trump a $6 trillion slush fund that would benefit his re-election more than it will help the country recover from the coronavirus pandemic.
The Department of Justice has since charged at least 500 people with criminal and civil enforcement efforts to combat COVID-19 related fraud, including schemes targeting the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) program and Unemployment Insurance (UI) programs.
Since the inception of the CARES Act, the DOJ Fraud Section has prosecuted more than 192 defendants in more than 121 criminal cases related to CARES Act programs and funds.
“The Department of Justice has led an historic enforcement initiative to detect and disrupt COVID-19 related fraud schemes,” said Attorney General Merrick B. Garland. “The impact of the department’s work to date sends a clear and unmistakable message to those who would exploit a national emergency to steal taxpayer-funded resources from vulnerable individuals and small businesses. We are committed to protecting the American people and the integrity of the critical lifelines provided for them by Congress, and we will continue to respond to this challenge.”
“To anyone thinking of using the global pandemic as an opportunity to scam and steal from hardworking Americans, my advice is simple – don’t,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “No matter where you are or who you are, we will find you and prosecute you to the fullest extent of the law.”
“We will not allow American citizens or the critical benefits programs that have been created to assist them to be preyed upon by those seeking to take advantage of this national emergency,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “We are proud to work with our law enforcement partners to hold wrongdoers accountable and to safeguard taxpayer funds.”