May 14 (UPI) — The Justice Department has charged two people, including a reality TV personality, for defrauding millions of dollars from the federal government allocated to help small businesses pay workers amid the coronavirus pandemic.
The Paycheck Protection Program — part of the more than $2 trillion coronavirus bailout package President Donald Trump signed into law in late March — was set up to disburse hundreds of billions of dollars in loans to small businesses to prevent worker furloughs and to pay other expenses as they incur losses due the impacts of the coronavirus pandemic.
On Wednesday, prosecutors said authorities arrested Maurice Fayne of the TV show Love & Hip Hop: Atlanta and Shashank Rai, a Texas engineer, for defrauding the PPP of millions of dollars.
The Department of Justice said in a statement that prosecutors have accused Fayne, 37, of Dacula, Ga., of using millions of PPP funds to buy jewelry.
According to court documents, Fayne, owner of Georgia corporation Flame Trucking, applied for a PPP loan on April 15 claiming to have a monthly payroll of nearly $1.5 million for 107 employees. He received $2.04 million, certifying it would be used to “retain workers and maintain payroll or make mortgage interest payments, lease payments and utility payments.”
Fayne allegedly spent more than $1.5 million of that money within days of receiving it to purchase $85,000 in jewelry, including a Rolex watch, a diamond bracelet and a diamond ring, and to pay $40,000 in child support, prosecutors said.
The reality TV star was interviewed last week by federal agents and said he used the loan to pay employees and to cover other Flame Trucking business expenses, denying any of it went to personal use.
On Monday, agents executed a search of Fayne’s Dacula residence, and seized about $80,000 in cash, the jewelry allegedly purchased with the PPP funds, and a 2019 Rolls-Royce Wraith that still had a temporary dealer tag on it, prosecutors said, adding an additional $503,000 of PPP funds were also seized from three bank accounts under his name.
“The defendant allegedly stole money meant to assist hard-hit employees and businesses during these difficult times, and instead used the money to bankroll his lavish purchases of jewelry and other personal items,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.
Rai, 30, of Beaumont, was also charged with attempting to defraud the government of more than $10 million in forgivable loans by claiming to have 250 employees when no one worked for his business, according to a statement by the Justice Department.
Prosecutors accused Rai of seeking some $13 million from the PPP by filing two claims for relief with two different banks.
According to court records, investigators were told by the Texas Workforce Commission that it had no records of employee wages having been paid by Rai or his company, Rai Family LLC, which also reported no revenue for the fourth quarter of 2019 or the first quarter of 2020.
“When an individual cheats the Paycheck Protection Program out of money, it deprives hard-working Americans and deserving small businesses,” said Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation.
The charges follow the Justice Department earlier this month announcing it will investigate potential fraud of the small-business loan program.
