California Man Charged with COVID-Relief Fraud

Summary

Justice Department news release dated July 16, 2020, titled California Man Charged with COVID-Relief Fraud. It announces that Andrew Marnell, 40, of Los Angeles, California, was charged by criminal complaint, unsealed upon arrest, in the Central District of California with one count of bank fraud. The complaint alleges that applications to insured financial institutions and others sought PPP loans on behalf of different companies, supported by fake and altered documents including fake federal tax filings. It further alleges that loan proceeds were transferred to a brokerage account and that hundreds of thousands of dollars were spent at a Las Vegas casino. The release states that a criminal complaint is merely an allegation and that all defendants are presumed innocent until proven guilty.

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A California man was arrested today and charged with fraudulently seeking over $8.5 million in Paycheck Protection Program (PPP) loans, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Nicola T. Hanna of the Central District of California.
Andrew Marnell, 40, of Los Angeles, California, was charged by criminal complaint, unsealed today upon his arrest, in the Central District of California with one count of bank fraud.
The complaint alleges that Marnell obtained approximately $8.5 million in PPP loans through applications to insured financial institutions, and others, on behalf of different companies.  The complaint alleges that Marnell caused to be submitted fraudulent loan applications that made numerous false and misleading statements about the companies’ respective business operations and payroll expenses.  The complaint also alleges that, in further support of the fraudulent loan applications, Marnell submitted fake and altered documents, including fake federal tax filings and employee payroll records.  The complaint also alleges that these loan applications were made by using false and fraudulent identifications that were aliases of Marnell.
The complaint further alleges that Marnell then transferred the fraudulently-obtained loan proceeds to his brokerage account to make risky stock-market bets and similarly spent hundreds of thousands of dollars in fraudulently-obtained loan proceeds at a Las Vegas casino.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29.  It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic.  One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent.  Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
A criminal complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the Federal Housing Finance Agency – Office of Inspector General, the FBI, Federal Deposit Insurance Corporation – Office of Inspector General, IRS – Criminal Investigation, the Treasury Inspector General for Tax Administration, and the Small Business Administration Office of Inspector General.  The California Department of Justice – Bureau of Gambling Control also provided assistance in the investigation.  Trial Attorney Scott Armstrong of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kerry Quinn of the Central District of California are prosecuting the case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at:
https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
.
The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at
www.Justice.gov/Celebrating150Years
.

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