Information — U.S. v. Blotnick

Record facts

U.S. District Court, District of New Jersey · No. 2:21-cr-00796-BRM · Doc. 15 · 2021-10-13 · Docket on CourtListener

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usAo#2021R0017z/FMC
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA : 
Hon.
:
v. 
: 
Crim. No. 21-
GREGORY J. BLOTNICK 
' 
rS U.S.C. S 1343
: 
18 U.S.C. S 1957
INFORMATION
The defendant having waived in open court prosecution by indictment, the
Acting United States Attorney for the District of New Jersey charges:
Count One
(Wire Fraud)
1. 
At all times relevant to this Information:
a. 
Defendant GREGORY J. BLOTNICK ("BLOTNICK') resided in New
York and Florida.
b. 
BLOTNICK owned and controlled a series of purported businesses
through which he submitted applications for federal COVID-19 emergency relief
funds, including BSC Opportunistic Equity, LP ("BSC Opportunistic") and Brattle
Street GP, LLC ("Brattle GP"). BSC Opportunistic was a Delaware limited
partnership and Brattle GP was a Delaware limited liability company.
c. 
Victim-Lender 1 was a financial institution headquartered in Utah.
d. 
The Victim Lenders were 13 separate financial institutions,
including Victim-Lender-1, each of which served as a lender for the Paycheck
Protection Program described below.
c2
 796-BRM
BRIAN R. MARTINOTTI
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e. 
Bank 1 was a financial institution headquartered in New York.
Paycheck Protection Program ("PPP")
f. 
The Coronavirus Aid, Relief, and Economic Security ("CARES") Act
was a federal law enacted in or about March 2020 designed to provide emergency
financial assistance to millions of Americans suffering economic effects caused by
the COVID-l9 pandemic. One source of relief provided by the CARES Act was the
authorization of up to $349 billion in forgivable loans to small businesses for job
retention and certain other expenses, through a program referred to as the PPP. In
or about April 2020, Congress authorized over $300 billion in additional PPP
funding.
g. 
To obtain a PPP loan, a qualifying business was required to submit a
PPP loan application, which had to be signed by an authorized representative of the
business. The loan application required the business-through its authorized
representative-to acknowledge the program rules and make certain affi.rmative
certifications to be eligible to obtain the PPP loan. In the loan application, the
small business must state, among other things, its average monthly payroll
expenses and number of employees. These figures were used to calculate the
amount of money the business was eligible to receive under the PPP. In addition,
businesses applying for a PPP loan were required to provide documentation
showing their payroll expenses.
h. 
A PPP loan application had to be processed by a participating
lender. If a loan application was approved, the participating lender funded the loan
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using its own money, which is 100% guaranteed by U.S. Small Business
Administration (the "SBA"). Data from the application, including information about
the borrower, the total amount of the loan, and the listed number of employees, was
transmitted by the lender to the SBA in the course of processing the loan.
i. 
PPP loan proceeds had to be used by the business on certain
permissible expenses such as payroll costs, interest on mortgages, rent, and
utilities. The PPP allowed the interest and principal on the PPP loan to be entirely
forgiven if the business used the loan proceeds on these expense items within a
designated period of time after receiving the proceeds and used a certain amount of
the PPP loan proceeds on payroll expenses.
The Scheme to Defraud
2. 
Beginning at least as early as in or around April 2020, through in or
around March 2021, in the District of New Jersey and elsewhere, defendant
GREGORY J. BLOTNICK
knowingly and intentionally devised and intended to devise a scheme and artifice to
defraud the Victim Lenders and to obtain money and property by means of
materially false and fraudulent pretenses, representations, and promises, which
scheme and artifice was in substance as set forth below.
Goal of the Scheme to Defraud
3. 
The goal of the scheme was for BLOTNICK to enrich himself by
fraudulently obtaining federal COVID-19 emergency relief funds from the Victim
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Lenders meant for distressed small businesses by submitting fraudulent loan
applications.
Manner and Means of Scherne to Defraud
4. 
It was part of the scheme that:
a. 
In or around April 2020 through in or around March 2027,
BLOTNICK submitted 2l fraudulent PPP loan applications to the Victim Lenders
on behalf of at least nine purported businesses that BLOTNICK controlled,
including BSC Opportunistic and Brattle GP. On these loan applications, which
sought a total of approximately $6,889,089 in total loans, BLOTNICK falsified
various information, including the number of employees, the federal tax returns for
his businesses, and payroll documentation. BLOTNICK obtained approximately
$4,681,796 in PPP funds and then misused the loan proceeds, including by
transferring the funds to brokerage accounts from which he placed more than
approximately $3 million in losing stock trades.
b. 
On or about April 25,2020, BLOTNICK submitted a PPP
application to Victim-Lender 1 for BSC Opportunistic seeking a loan for
approximately $302,065 (the "Application"). BLOTNICK submitted the Application
in his name and listed himself as the owner of BSC Opportunistic.
c. 
The Application and supporting documentation contained
i 
materially false and fraudulent information, including falsified payroll
documentation for April 20Lg through March 2020 claiming that BSC Opportunistic
had 17 employees and average monthly payroll amounts of approximately $127,500.
4
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BLOTNICK also certified in the Application that the loan proceeds would be used
only for business-related purposes.
d. 
BLOTNICI(s fraudulent Application caused Victim-Lender 1 to
disburse approximately $302,065 in PPP funds on or about April 30,2020 via
interstate wire through the District of New Jersey to an account that BLOTNICK
controlled at Bank 1.
e. 
After fraudulently obtaining $302,065 in PPP funds from
Victim-Lender 1, BLOTNICK transferred the funds to brokerage accounts that he
owned and controlled at a stock brokerage firm (together, the "Blotnick Brokerage
Account"). BLOTNICK then used this money to trade stocks.
5. 
On or about April 30,2020, for the purpose of executing and
attempting to execute the scheme and artifice to defraud, in the District of New
Jersey and elsewhere, defendant
GREGORY J. BLOTNICK
knowingly and intentionally transmitted and caused to be transmitted by means of
wire communications in interstate commerce certain writings, signs, signals,
pictures, and sounds, namely, a wire transfer of approximately $302,065 in PPP funds
from Victim-Lender 1 into BLOTNICK's bank account at Bank 1.
In violation of Title 18, United States Code, Section 1343.
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Count Two
(Money Laundering)
6. 
The allegations set forth in Paragraphs 1 through 4 of Count One of
this Information are realleged here.
7. 
On or about May 13, 2020, in the District of New Jersey and
elsewhere, defendant
GREGORY J. BLOTNICK
knowingly engaged in a monetary transaction by, through, and to a financial
institution, affecting interstate and foreign commerce, in criminally derived
property of a greater value than $10,000, that is, the transfer of approximately
$100,000 from a bank account at Bank 1 to the Blotnick Brokerage Account, such
property having been derived from a specified unlawful activity, that is, wire fraud.
In violation of Title 18, United States Code, Section 7957 .
6
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FORFEITURE ALLEGATION AS TO COUNT ONE
1. 
As a result of committing the offense alleged in Count One of the
Information, BLOTNICK shall forfeit to the United States, pursuant to 18 U.S.C. S
982(a)(2), any property constituting or derived from proceeds obtained directly or
indirectly as a result of such offense.
FORFEITURE ALLEGATION AS TO COUNT TWO
2. 
As a result of committing the offense alleged in Count Two of the
Information, BLOTNICK shall forfeit to the United States, pursuant to 18 U.S.C. S
982(a)(2), any property constituting or derived from proceeds obtained directly or
indirectly as a result of such offense.
SUBSTITUTE ASSETS PROVISION
(Applicable to All Forfeiture Allegations)
3. 
If by any act or omission of the defendant any of the property subject to
forfeiture:
a. 
cannot be located upon the exercise of due diligence;
b. 
has been transferred of sold to, or deposited with, a third party;
c. 
has been placed beyond the jurisdiction of the court;
d. 
has been substantially diminished in value; or
e. 
has been commingled with other property which cannot be
divided without difficulty,
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it is the intent of the United States, pursuant to 27 U.S.C. S 853(p), as incorporated
by 18 U.S.C. S 982(bX1) and 28 U.S.C. $ 2461(c), to seek forfeiture of any other
property of such defendant up to the value of the forfeitable property described in
paragraphs 1 and 2.
JOSEPH S. BEEMSTERBOER
Acting Chief, Fraud Section
Criminal Division
U.S. Department of Justice
RAC}IAEL A. HO
Acting United Statft Attorney
District of New Jersey
8
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CASE NUMBER: 21-_________ 
═════════════════════════════════ 
United States District Court 
District of New Jersey 
═════════════════════════════════ 
 
UNITED STATES OF AMERICA 
 
v. 
 
GREGORY J. BLOTNICK 
 
═════════════════════════════════ 
INFORMATION FOR 
 
18 U.S.C. §§ 1343 and 1957 
 
═════════════════════════════════ 
RACHAEL A. HONIG 
ACTING UNITED STATES ATTORNEY  
FOR THE DISTRICT OF NEW JERSEY 
═════════════════════════════════ 
FATIME MEKA CANO 
ASSISTANT U.S. ATTORNEY 
NEWARK, NEW JERSEY 
(973) 856-9384 
═════════════════════════════════ 
JOSEPH S. BEEMSTERBOER 
ACTING CHIEF, FRAUD SECTION  
CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE 
═════════════════════════════════ 
CORY E. JACOBS 
TRIAL ATTORNEY, FRAUD SECTION 
CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE 
(202) 616-4994 
 
Case 2:21-cr-00796-BRM   Document 15   Filed 10/13/21   Page 9 of 9 PageID: 47

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