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James Stote's $35 Million PPP Recruiting Ring Nets Ten Years, Reaches Three Districts

The U.S. District Court for the Northern District of Ohio sentenced James Stote, also charged in court records as James Richard Stote, 56, of Hollywood, Florida, to ten years in prison on May 6, 2022, for leading a nationwide scheme to defraud the Paycheck Protection Program. Co-defendant Phillip J. Augustin, 53, of Coral Springs, was sentenced to six and a half years for his role in the scheme. Stote and Augustin each pleaded guilty to conspiracy to commit wire fraud on December 14, 2021.1

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According to court documents, Augustin and Stote first obtained a fraudulent PPP loan for Augustin's company, Clear Vision Music Group LLC, using falsified documents. They then began recruiting additional PPP loan applicants and preparing fraudulent applications for them in exchange for a share of the proceeds. Augustin used his network of contacts as a manager for professional football players to recruit applicants. The applications relied on fake payroll numbers, falsified IRS forms, and phony bank statements. Stote submitted or facilitated at least 79 fraudulent loan applications worth at least $35 million; Augustin was held responsible for at least 34 of those applications, worth at least $15 million. In total, 25 people were charged for participation in the scheme across the Northern District of Ohio, the Southern District of Florida, and the Middle District of North Carolina.1

One prong of the scheme reached Solon and Highland Heights, Ohio, where Deon D. Levy owned two corporations. According to the release on Levy's sentencing, court records show the loan applications for Levy's businesses were submitted by co-conspirators James Richard Stote and Ross Charno. In return, Levy paid a kickback of approximately 25 percent of each PPP loan secured, and the SBA issued two loans worth approximately $875,000 to accounts Levy controlled. Levy was sentenced on January 13, 2023, to 15 months in prison and ordered to pay $195,900.34 in restitution. Ross Charno was sentenced to two years in prison for his role.2

Stote was ordered to serve three years of supervised release, pay $10,149,752.69 in restitution, and forfeit $1,137,715.13 in cash along with four Rolex watches and other jewelry valued at more than $31,000. Augustin was ordered to serve three years of supervised release, pay $5,910,277.72 in restitution, and forfeit $280,269.35. The case was investigated by IRS Criminal Investigation's Cincinnati Field Office, the FBI's Cleveland Field Office, and the SBA Office of Inspector General's Central Region. Assistant U.S. Attorney Elliot Morrison for the Northern District of Ohio and Trial Attorney Philip Trout of the Justice Department's Criminal Division Fraud Section prosecuted it.1

Documents cited

Notes

  1. U.S. Attorney's Office for the Northern District of Ohio, "Two Florida Men Sentenced to Ten and Six and a Half Years in Prison for Roles in Massive COVID-19 Relief Fraud Scheme" (original), May 6, 2022. ↩1 ↩2 ↩3
  2. U.S. Attorney's Office for the Northern District of Ohio, "Owner of Two Northeast Ohio Businesses Sentenced to Prison for PPP Loan Fraud" (original), January 19, 2023. ↩
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