Complaint — United States ex rel. Victoria Hablitzel v. All in Jets, LLC (No. 0:20-cv-61410, S.D. Fla.)

Summary

A qui tam complaint filed under seal by relator Victoria Hablitzel in the name of the United States against All in Jets, LLC and Seth A. Bernstein, Case No. 0:20-cv-61410-CMA, in the U.S. District Court for the Southern District of Florida, dated July 13, 2020 and entered as Document 2. The complaint alleges that All in Jets, a jet charter company operating as JetReady, received a PPP loan of $1,173,382 on April 27, 2020 and, at Bernstein's direction, transferred most of the funds to an investment bank Bernstein co-owned and to third-party companies instead of payroll, rent, mortgage interest or utilities. It asserts claims under the False Claims Act, 31 U.S.C. § 3729, and seeks treble damages, civil penalties of not less than $11,665.00 per violation, a relator's share under 31 U.S.C. § 3730(d), and a jury trial. Counsel for the relator are from McCabe Rabin, P.A.

Summary drafted by a model from the text of the original file linked on this page and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Cite this document

“Complaint — United States ex rel. Victoria Hablitzel v. All in Jets, LLC (No. 0:20-cv-61410, S.D. Fla.).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/complaint-no-0-20-cv-61410-dkt-2-s-d-fla-a1d6f1cdfa/, SHA-256 7fccf456238e17ca07621f4a1c4c8c94ee328f9bc785f916bb7aa8bd0d41a30e.

Full text

Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 1 of 17
DJ

UNITED STATES DISTRICT COURT Jul 13, 2020
SOUTHERN DISTRICT OF FLORIDA
WPB
20-CV-61410-ALTONAGA/ STRAUSS
____________________

UNITED STATES OF AMERICA,
ex rel. VICTORIA HABLITZEL,

Plaintiff, FILED UNDER SEAL
v. DO NOT SERVE
ALL IN JETS, LLC and DO NOT PUT ON PACER
SETH A. BERNSTEIN,

Defendants
______________________________________/

QUI TAM COMPLAINT

The Relator, Victoria Hablitzel, files this qui tam action in the name of the United States

against All in Jets, LLC and Seth A. Bernstein (“Defendants”), pursuant to 31 U.S.C. § 3730, and

states as follows:

Introduction

1. On March 11, 2020, the World Health Organization declared the novel coronavirus

(COVID-19) a global pandemic. On March 27, 2020, the President signed into law the

Coronavirus Aid, Relief and Economic Security Act, which created the Paycheck Protection

Program (“PPP”).

2. The PPP provides forgivable, emergency loans to small businesses that certify,

under penalty of fine or imprisonment, that they will use the funds only to pay for payroll expenses,

rent, mortgage interest, or utilities during a covered period.

3. On April 27, 2020, All in Jets, LLC (“JetReady”), a Florida-based jet chartering

company, received a PPP loan in the amount of $1,173,382. Despite the clear requirements, as

stated on the application form, that loan funds obtained through the program must be used only to
1
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 2 of 17

pay a business’s payroll, rent, mortgage interest, or utilities expenses, JetReady knowingly failed

to use the funds for such purposes.

4. Instead, at the direction of its owner, Seth A. Bernstein, JetReady immediately

misappropriated the funds by transferring them to: (a) an investment bank that Mr. Bernstein co-

owned; (b) various third party companies to whom Mr. Bernstein either owed money or from

whom he would receive a direct personal benefit; and (c) an outside pilot service to pay part of

JetReady’s overdue invoices.

5. In sum, this knowing misappropriation of federal funds violates the False Claims

Act because the Government would not have funded the loan if it knew that JetReady had falsely

certified its intended use of the funds. Accordingly, both JetReady and Mr. Bernstein caused

JetReady to submit a false claim to the Government for which they should be held liable, jointly

and severally, for actual damages, treble damages, fines, and attorney’s fees.

Parties, Jurisdiction, and Venue

6. Relator Victoria Hablitzel (“Hablitzel”) resides in Pompano Beach, Florida. From

2017 until early May 2020, she served as a Senior Accountant and, after a promotion, Assistant

Controller for Defendant JetReady. During her tenure with JetReady, Hablitzel worked primarily

out of JetReady’s headquarters in Fort Lauderdale. On March 9, 2020, JetReady’s Chief Financial

Officer and Co-Chairman, Daniel Hebert (“Hebert”) informed Hablitzel that the company would

be laying her off with three months’ severance pay. During her severance period, Hablitzel was

encouraged to still come into work, which she did until she accepted another position. Hablitzel’s

last day at JetReady was on May 7, 2020.

7. Defendant All in Jets, LLC, is a Florida limited liability company with its principal

place of business in Fort Lauderdale, Broward County, Florida. It operates under the tradename

“JetReady” and has a Florida fictitious name registration for the name. JetReady is a private jet
2
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 3 of 17

charter operator and aircraft management company that provides charter flights worldwide and has

a charter fleet of heavy to midsize jets including Gulfstream GIVSPs, Gulfstream GIVs,

Challenger 601s and Hawker 800 models. JetReady’s base of operations is located at 140 S.

Apollo Blvd., Melbourne, Brevard County, Florida. As mentioned above, Daniel Hebert is

JetReady’s CFO and Co-Chairman. John Scotto (“Scotto”) is JetReady’s President of Sales and

its Co-Chairman. Joseph Carello (“Carello”) is JetReady’s Director of Operations. As of February

1, 2020, JetReady had approximately 75 employees, including but not limited to pilots, flight

attendants, mechanics, and various operational and administrative employees. By April 1, 2020,

JetReady had laid off approximately 55 employees and had only 20 remaining. When Hablitzel

left JetReady on May 7, the company was still at 20 employees.

8. Defendant Seth Adam Bernstein (“Bernstein”) is the owner of JetReady. He resides

at 2104 Lakehaven Point, Longwood, Florida. Today, in addition to owning JetReady, Bernstein

is the owner, chairman & CEO of SMB Capital (“SMB Capital”), a private equity and advisory

firm based in Manhattan. SMB Capital’s office is located at 655 Madison Avenue, 20th Floor New

York, NY 10065, the same address that JetReady lists as its New York address. Bernstein is also

the current co-owner and CEO of Bernstein Equity Partners, LLC, an investment bank that

Bernstein co-owns and manages with Hebert. BEP owns Bernstein Hebert Securities LLC, a

registered FINRA securities broker-dealer. BEP shares the same New York address as SMB

Capital and JetReady.

9. This Court has subject-matter jurisdiction over this matter pursuant to 28 U.S.C. §

1331.

10. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(1) and 31 U.S.C. §

3732(a).

3
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 4 of 17

General Allegations

The Paycheck Protection Program

11. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act

(the “CARES Act”), Pub. L. 116-136, 134 Stat. 281, created the PPP, initially making $349 billion

in forgivable loans available to small businesses impacted by the COVID-19 pandemic. The

U.S. Small Business Administration (“SBA”) administers the PPP, promulgates the rules and

regulations governing the PPP, and guarantees all PPP loans made by lenders.

12. The PPP allows small businesses (less than 500 employees) to obtain forgivable

loans of up to $10 million, at 1% interest, to cover payroll costs, rent, mortgage interest, utilities

and other overhead expenses for a “covered period.” PPP loans are processed and approved by

qualified lenders that the SBA approves. Lenders may issue PPP loans without the SBA’s prior

review or approval, but lenders must agree to be responsible for determining borrower

eligibility under the SBA’s criteria. To that end, the SBA issued interim final rules governing

PPP eligibility on April 2, April 3, April 14, and April 24, 2020.

13. Because the initial $349 billion originally allocated for the PPP was quickly

exhausted, Congress proposed a bill authorizing a second tranche of emergency funding.

Accordingly, on April 24, 2020, the President signed into law the Paycheck Protection Program

and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620, whereby Congress

allocated another $310 billion for PPP loans to small businesses. The SBA continued to adopt

interim rules governing eligibility through June 24, 2020.

14. On June 5, 2020, the PPP was further modified when the President signed the

Paycheck Protection Program Flexibility Act of 2020 (“Flexibility Act”), Pub. L. No. 116-142,

134 Stat. 641. The Flexibility Act modifies the original PPP loan criteria that was set forth in

the CARES Act. Some of the major modifications set forth in the Flexibility Act are:
4
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 5 of 17

• Congress changed the loan repayment period from 2 years to 5 years with the interest
rate remaining at 1%.

• Congress expanded the original 8-week “covered period” for a business to exhaust its
loan proceeds on payroll, rent, mortgage interest, or utilities, before the borrower may
qualify for loan forgiveness. The new covered period is the earlier of a 24-week period
or December 31, 2020, for any new borrower after June 5, 2020, to spend the loan funds
on approved expenses. Borrowers who borrowed before June 5, 2020, may choose
between the 8-week covered period or the extended period.

• Congress relaxed the requirement that 75% of the borrower’s loan funds be spent on
payroll expenses and reduced the requirement to 60%. The remaining 40% of the funds
may be used for rent, mortgage payments, or utilities.

• Congress extended the deferral period for loan repayments to begin for any unforgiven
loan amount from 6 months to the date on which the borrower’s forgiveness amount is
remitted to the lender.

• Congress extended the safe harbor date from June 30, 2020, to December 31, 2020, for
a borrower to rehire laid off full-time equivalent (“FTE”) employees, so as not to have
the borrower’s loan forgiveness amount reduced.

• Between February 15 and December 31, 2020, loan forgiveness will be determined
without regard to the reduction of FTE employees, if the borrower in good faith can
prove either: (a) an inability to rehire individuals who were employees on February 15,
2020, and an inability to hire similar qualified employees by December 31, 2020; or (b)
the business has been unable to return to the same level of business activity it was at
before February 1, 2020, due to COVID-19 health compliance requirements.

15. As of June 20, 2020, 5,456 lenders participated in the PPP, issuing 4,666,560

loans totaling nearly $515 billion. Notably, PPP loans in excess of $1 million comprise only

1.7% of the total number of loans funded across the country, and the average loan amount is

$110,000.

The PPP Borrower Application Form

16. The PPP has a uniform Borrower Application Form (“BAF”) that lenders must

use or incorporate into their loan applications. A copy of the BAF (issued by the SBA on April

2, 2020) is attached as Exhibit 1. In addition to asking for the business’s average monthly

payroll expense, the business’s number of employees, and the names of all owners who own

5
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 6 of 17

20% or more equity in the business, the BAF requires the borrower to represent the “purpose

of the loan” by checking boxes for more than one of the following categories: payroll,

lease/mortgage interest, utilities, or other (with room to explain other).

17. In addition to identifying the purpose of the loan, the BAF requires the following

certifications:

• “The Applicant is eligible to receive a loan under the rules in effect at the time this
application is submitted that have been issued by the Small Business Administration
(SBA) implementing the Paycheck Protection Program under [the CARES Act] (the
Paycheck Protection Program Rule).”

• “All SBA loan proceeds will be used only for business-related purposes as specified
in the loan application and consistent with the Paycheck Protection Program Rule.”

See Exhibit 1 (emphasis added).

18. The BAF further requires, in relevant part, that an authorized representative of

the applicant “certify in good faith” each of the following by initialing next to each item:

• “Current economic uncertainty makes this loan request necessary to support the
ongoing operations of the Applicant.”

• “The funds will be used to retain workers and maintain payroll or make mortgage
interest payments, lease payments, and utility payments, as specified under the Paycheck
Protection Program Rule; I understand that if the funds are knowingly used for
unauthorized purposes, the federal government may hold me legally liable, such as
for charges of fraud.”

• “I further certify that the information provided in this application and the
information provided in all supporting documents and forms is true and accurate in all
material respects. I understand that knowingly making a false statement to obtain
a guaranteed loan from SBA is punishable under the law, including under 18 U.S.C.
1001 and 3571 by imprisonment of not more than five years and/or a fine of up to
$250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine
or not more than $5,000; and, if submitted to a federal insured institution, under 18
USC 1014 by imprisonment of not more than thirty years and/or a fine or not more
than $1,000,000.”

See Exhibit 1 (emphasis added).

6
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 7 of 17

19. While Hablitzel does not possess a copy of JetReady’s final BAF submitted to

its lender, First Bank of the Lake, a state bank chartered in Missouri, JetReady was required to

certify to the truth and accuracy of the above representations in the BAF, the falsity of which is

punishable by significant liability, fines and imprisonment.

JetReady Fraudulently Represents on its PPP Loan Application
That it Will Use the Loan Funds Only for Authorized Purposes

20. As of February 1, 2020, JetReady had approximately 75 employees, including but

not limited to pilots, flights attendants, mechanics, and various operational and financial

employees.

21. As of Hablitzel’s last day of employment at JetReady on May 7, 2020, JetReady

had 20 employees. Of the approximately 55 employees that JetReady laid off, the company

terminated all of them before April 1, 2020. Upon information and belief, none of the terminated

employees have been rehired.

22. On April 3, 2020, Hebert and Bernstein completed a draft BAF on behalf of

JetReady. See Exhibit 2. While Hebert and Bernstein executed the form, they did not submit

it, as they did not have information regarding JetReady’s payroll. Nevertheless, on the draft,

Hebert and Bernstein represented that the loan would be used for “payroll.” Id.

23. In mid-April 2020, Hebert and Scotto took the lead in preparing and submitting

JetReady’s final BAF (“JetReady BAF”).

24. In preparing the final version of the JetReady BAF, Hebert and Scotto enlisted

the assistance of Tavita Halkett, Bernstein’s executive assistant and an employee of Bernstein

Equity Partners, and Hablitzel in gathering certain documents and information. While Hablitzel

did not assist Hebert or Scotto in filling out the actual application, in mid-April, she provided

Scotto a payroll report that ADP prepared for PPP purposes.

7
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 8 of 17

25. On or about April 16, 2020, the First Bank of the Lake, based in Missouri, approved

the JetReady BAF.

26. On the morning of April 27, 2020, JetReady received $1,173,382 in PPP funds,

via electronic transfer into its account at Wells Fargo Bank. Before JetReady received the funds,

it had a negative balance in the account of -$2,750.92.

JetReady Misuses its PPP Funds

27. Immediately upon receipt of the funds, at Bernstein’s direction, Halkett and

Hebert, enlisted Hablitzel’s assistance in transferring the almost all of the funds away from

JetReady.

28. Some of the funds were used to pay JetReady’s overdue invoices. The majority

of the funds, however, were sent to an investment bank co-owned by Bernstein and Hebert and

a variety of third-party companies to whom Bernstein either owed money, or from whom he

would derive a personal benefit.

29. Hablitzel and Halkett transferred the funds to the following destinations at

Bernstein’s request:

Date Recipient Executed Amount
Transfer
4/27/20 Hathaway Pilot Services Hablitzel $25,000
4/27/20 Nantucket Dreamland Foundation Hablitzel $25,000
4/27/20 Bernstein Equity Partners Hablitzel $350,000
4/28/20 Bernstein Equity Partners Hablitzel $400,000
4/28/20 SCCF LLC Halkett $26,794.35
4/28/20 Ramsey Psychiatr Halkett $26,700
4/28/20 Ramsey Psychiatr Halkett $15,000
4/28/20 Ramsey Psychiatr Halkett $5,435
4/29/20 Bernstein Equity Partners Hablitzel $250,000
$1,123,929.35

8
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 9 of 17

The relevant portion of JetReady’s Wells Fargo April 30, 2020, bank statement, showing the

deposit of $1,173,382 in PPP funds and the above transfers totaling $1,123,929.35, is attached

as Exhibit 3.

30. Because Hablitzel left JetReady on May 7, 2020, she does not know how

JetReady spent the $49,452.65 balance of the PPP funds.

31. Bernstein Equity Partners is an investment bank that Bernstein and Hebert co-

own and co-manage in Manhattan. That entity – with no other apparent connection to JetReady

– received $1,000,000 in wire transfers from JetReady’s PPP funds.

32. Likewise, Nantucket Dreamland Foundation (“NDF”) received a $25,000

transfer from JetReady. In April 2020, NDF was hosting a fundraising campaign to build a

drive-in theater in Nantucket, Massachusetts, for summer residents. Notably, on April 28, the

date on which JetReady transferred $25,000 in PPP funds to NDF, NDF publicly thanked “long-

time friend and generous donor…Seth Bernstein” for “a challenge gift of $25,000,” noting that

every dollar donated by others would be matched by Bernstein up to $25,000.

33. On April 27, JetReady transferred $26,794.35 of its PPP funds to SCCF LLC

(Sports Construction of Central Florida), a company in Winter Park, Florida, that builds sports

fields and courts. Upon information and belief, these funds were used to pay for the

construction of a sports court, e.g., tennis, basketball, etc., at Bernstein’s home or another

location.

34. On April 27, JetReady transferred $25,000 of its PPP funds to Hathaway Pilot

Services (“HPS”). Charles L. Hathaway, Jr. (“Hathaway”), is the principal of HPS and resides

in Las Vegas, Nevada. Hathaway has been a contract pilot and seller of aircrafts with HPS for

37 years and has been a pilot for 40 years. In 2010, Hathaway pled guilty to wire fraud, mail

fraud, and conspiracy charges in the Middle District of Florida (Case No. 09-cr-00018),
9
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 10 of 17

resulting from an indictment charging him and his associates with submitting $10 million in

false invoices to an aviation company over a 15-year period. As of March 27, 2020, JetReady

purportedly “owed” HPS for $49,843.00 for unspecified pilot services. Payment of these invoices,

however, was not an authorized use of PPP funds, i.e., payroll, rent, mortgage interest, or

utilities expenses. Even assuming HPS provided pilot services to JetReady, HPS was not an

“employee” of JetReady.

35. On April 28, JetReady made three transfers totaling $37,135 to “Ramsey

Psychiatr[y]”, but neither the full name of the entity, nor the purpose of the transfers, is clear.

Regardless of what goods or services were purchased from “Ramsey Psychiatr[y]” with JetReady’s

PPP funds, this expense likewise did not fall into one of the four permissible categories.

36. In sum, it is unequivocal that JetReady’s PPP funds were not used for authorized

purposes under the PPP, which are limited to JetReady’s payroll, rent, mortgage interest, or

utilities expenses.

Bernstein Directed the Transfers of JetReady’s PPP Funds

37. E-mail traffic among JetReady’s employees makes clear that Bernstein

masterminded the misappropriation and misuse of JetReady’s PPP funds.

38. On April 27, 2020, at 8:52 a.m. (the same morning on which JetReady received

the PPP funds), Halkett emailed Hablitzel, notifying Hablitzel that she initiated a wire for

$26,794.35 from the JetReady Wells Fargo account to pay SCCF for an invoice referencing

“sports camp.”

39. On April 27, 2020, at 10:47 a.m., Halkett emailed Hablitzel, directing Hablitzel

to wire $25,000.00 to “Chuck Hathaway today (ASAP).” At 10:59 a.m., Hablitzel emailed

Halkett the wire confirmation.

10
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 11 of 17

40. On April 27, 2020, at 11:35 a.m., Halkett emailed Hablitzel, directing Hablitzel

to wire $25,000.00 to Nantucket Dreamland Foundation. When Hablitzel asked Halkett if she

should note “on behalf of Seth Bernstein” on the transfer form, Halkett replied to just say, “Seth

Bernstein.”

41. On April 27, 2020, at 2:44 p.m., upon receiving a request to wire most of the PPP

funds to Bernstein Equity Partners, Hablitzel emailed Halkett and Hebert to provide them with

a summary spreadsheet of the wires sent from the JetReady Wells Fargo account up to that point

on April 27, 2020. In addition to those transfers above, the spreadsheet also included the three

transfers to “Ramsey Psychiatr[y]” totaling $37,135.00, with a reference notation of “Seth

Personal 04/27/20.”

42. In response to Halkett and Hebert’s inquiry about wiring funds to Bernstein

Equity Partners, Hablitzel referenced that there is a $500,000.00 per day cap on wire transfers

from the JetReady Wells Fargo. Hablitzel offered to “wire $500k today, $500k tomorrow, and

the remainder on Wednesday [April 29].”

43. On April 27 at 2:46 p.m., Hablitzel corrected her prior email and says she will

only be wiring $450,000.00 to Bernstein Equity Partners that day because she had already

executed $50,000.00 in wires from the Wells Fargo account that day. Hebert responds, “Okay

no worries. But please make sure with Karen or Bob that no ACH pulls are approved.” Shortly

thereafter, Hablitzel again corrects the amount of the wire and says Wells Fargo informed her

that JetReady exceeded the wire limit for one day, so she could only wire $350,000.00 to

Bernstein Equity Partners. She follows with a confirming email to Hebert and Halkett,

enclosing the wire receipt for $350,000.00.

44. On April 28, 2020, at 11:56 a.m. Halkett emails Hablitzel, copying Hebert, and

states, in relevant part:
11
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 12 of 17

As per Seth’s instructions to me, please wire

The maximum daily amount allowed into BEP Wells Fargo account.

(Emphasis added).

45. On April 28, 2020, at 12:02 p.m., Hablitzel replied to Halkett’s email, copying

Hebert, and states:

I would like confirmation that this has been approved by all parties. Dan please
confirm.

Further, I would like written confirmation that I have had no decision making
authority in regards to the release of any/all funds and that I will not have any
liability associated with any claims of misappropriated funds.

46. On April 28 at 12:13 p.m., Hebert responded to Hablitzel, and states:

Tavita was instructed by Seth to move the funds from JetReady to BEP. I
hereby confirm that the instructions originated from and approved by Seth
Bernstein.

In addition, I hereby confirm ath (sic) you have no decision-making authority
with respect to the disbursement of funds in the JetReady Wells Fargo account.

(Emphasis added).

47. On April 28 at 12:15 p.m., Hablitzel forwarded Hebert’s email to Carello,

JetReady’s Director of Operations.

48. On April 28 at 12:25 p.m., Hablitzel emails Hebert and Halkett, and states:

I’m in a very awkward situation with all of this. I was terminated back on March
9th, 2020 (effective 03/06/2020) and have been wanting to return my bank tokens
and transfer the banking permissions to someone other than myself since the first
week of March. I have been willing to assist in the meantime with payroll
processing and general accounting questions as needed by Impacct. I do not feel
comfortable with any of this and would prefer for Dan to initiate the transfer
of funds. Dan does have signing authority and should be able to process the
transfer.

(Emphasis added).

12
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 13 of 17

49. At 12:41 p.m. on the same day, Hebert responds: “Your email has been received

and message acknowledged.”

50. On April 28, 2020 at 9:39 a.m., Carello emailed Hebert, with a copy to Scotto,

strongly objecting to the misappropriation of JetReady’s PPP funds for unauthorized uses. His

email states:

Good morning Dan,

It has come to my attention that the PPP funds have been grossly
misappropriated and are already almost half gone, without having paid any of
JetReady’s obligations nor going to fund payroll of furloughed employees.

The sentiments that you expressed yesterday in regards to this being the “owners
money” are not exactly accurate for several reasons, the most primary being that
it’s considered fraud if misappropriated. The intention of the PPP program is to
get American's working again during this time of crisis, not to pay the owners
frivolous personal expenses or transfer to a hedge fund.

By misallocating these funds JetReady's operation has been put in jeopardy
potentially endangering the crew members on the road, and definitively harming
the viability and longevity of the company as a whole.

I implore you to return the money that was transferred to Bernstein Equity
Partners and utilize it properly, as intended by the Federal Government, to get
our airplanes operational and bring the crew members out of furlough.

A copy of Carello’s email is attached as Exhibit 4 (Emphasis added).

51. On April 28, 2020, at 2:26 p.m., in response to Carello’s earlier email to Hebert

and Scotto, Bernstein replied to all as follows:

Joe-
I received the email-
I moved the money to Bernstein equity partners not a hedge fund and not for
my frivolous expenses-
PPP money is a government loan in which I have to pay back.
I have billions of dollars how I have been able to buy all my planes with no debt.
Jetready has stolen from me, been mismanaged and cost me over 18 million of
losses.
It is why I decided to let jetready become self sufficient or be cash break even.
In any case you cease and desist the wrong information you are providing to
people and also the badmouthing of me and the company. Last I checked you are
13
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 14 of 17

paid and only have 1 to 2 planes flying. Any other co would not have all these
ppl for 1-2 planes on cert.
Seth-

A copy of the email chain is attached as Exhibit 5 (Emphasis added).

52. The next morning, on April 29 at 9:55 a.m., Carello sent a lengthy reply to

Bernstein, with a copy to Hebert and Scotto, which stated, in pertinent part:

Seth,

Payroll Protection Plan money is a fully forgivable grant as long as it’s used for
75% payroll and 25% overhead and staffing is brought back to pre covid levels
by June 30th. It is clearly defined to be used for those purposes and is tax payer
money set aside to keep Americans employed during this global crisis. It is not
a standard loan and the program does not have unlimited funds nor is it designed
to support companies that don’t need it or intend to use it appropriately. It is
intended only for those planning on keeping Americans employed through this
crisis and authorized only for specific uses as outlined under the SBA guidelines.
Any spending outside of those guidelines could be considered fraud and I suggest
that you consult with counsel to determine liability in that regard. If you in fact
have billions of dollars in liquidity that in itself would preclude you and jetready
from loan eligibility as it would be an alternative source of funding for the
company negating that need.

See Exhibit 5.

53. Upon information and belief, Bernstein has engineered receipt of other

fraudulent PPP loans, including a loan to International Jet Charters, LLC.

Attorney’s Fees and Conditions Precedent

54. All conditions precedent to filing suit have been performed or waived.

55. The specific facts and circumstances alleged in this Complaint have not been

publicly disclosed: (a) in a federal criminal, civil, or administrative hearing in which the U.S.

Government or its agent is a party; (b) in a Congressional, Government Accountability Office,

or other U.S. Government report, hearing, audit, investigation; or (c) to the news media.

56. To the extent any Court determines that a public disclosure has taken place,

Hablitzel is an original source of the information upon which this Complaint is based, as that
14
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 15 of 17

term is defined in 31 U.S.C. § 3730(e)(4)(B). Specifically, on or about July 6, 2020, Hablitzel

disclosed to the government the information on which the allegations in this Complaint are

based.

Count I
31 U.S.C. § 3729(a)(1)(A)

57. The Relator realleges the allegations made in Paragraphs 1 through 56.

58. This a claim for treble damages and forfeitures under the False Claims Act, 31

U.S.C. §§ 3729-32, as amended.

59. Through the acts described above, Defendants and their agents and employees

knowingly presented and caused to be presented to the Government materially false or fraudulent

claims for a PPP loan.

60. The Government, unaware of the material falsity of the claims made or caused to

be made by the Defendants, approved, paid, and participated in payments made by the

Government’s fiscal intermediaries for a loan that otherwise would not have been allowed.

61. By reason of these payments and approvals, the Government has been damaged and

continues to be damaged, in an amount yet to be determined.

WHEREFORE, the Relator requests that judgment be entered against Defendants, ordering

that:

a. Defendants cease and desist from violating the False Claims Act, 31 U.S.C. §3729

et seq.;

b. Defendants pay an amount equal to three times the amount of damages the

Government has sustained because of Defendants’ actions, plus a civil penalty against

Defendants of not less than $11,665.00 for each violation of 31 U.S.C. § 3729;

c. The Relator be awarded the maximum amount allowed pursuant to 31 U.S.C. §

15
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 16 of 17

3730(d);

d. The Relator be awarded all costs of this action, including attorneys’ fees, expenses,

and costs pursuant to 31 U.S.C. § 3730(d); and

e. The Government and the Relator be granted all such other relief as the Court deems

just and proper.

Count II
31 U.S.C. § 3729(a)(1)(B)

62. The Relator realleges the allegations made in Paragraphs 1 through 56.

63. This a claim for treble damages and forfeitures under the False Claims Act, 31

U.S.C. §§ 3729-32, as amended.

64. Through the acts described above, Defendants knowingly used or caused to be used

a materially false record or statements to get a PPP loan paid using U.S. Government funds.

65. The Government was unaware of the material falsity of the records, statements, and

claims Defendants submitted as part of the JetReady BAF.

66. But for Defendants’ use of the materially false record or statement, the PPP loan

would not have been paid.

67. By reason of Defendants’ use of these materially false records and statements, the

Government has been damaged.

WHEREFORE, the Relator requests that judgment be entered against Defendants, ordering

that:

a. Defendants cease and desist from violating the False Claims Act, 31 U.S.C. §3729

et seq.;

b. Defendants pay an amount equal to three times the amount of damages the

Government has sustained because of Defendants’ actions, plus a civil penalty against

16
Case 0:20-cv-61410-CMA Document 2 Entered on FLSD Docket 07/13/2020 Page 17 of 17

File and source

File: 2-complaint.pdf
Size: 483,203 bytes
SHA-256: 7fccf456238e17ca07621f4a1c4c8c94ee328f9bc785f916bb7aa8bd0d41a30e
Our copy: 2-complaint.pdf
Original: archive.org