U.S. Department of Labor OIG, Five Individuals Charged in Multi-State COVID-19 Relief Program Fraud Scheme (USAO D-NJ 07/19/2023) (2023-07-21)

Summary

A July 19, 2023 press release (No. 23-206) from the U.S. Attorney's Office for the District of New Jersey announcing complaints charging five people over fraudulently obtained PPP and EIDL loans and laundering of the proceeds, and guilty pleas by two others. Eric Rivera, Lisa Smith, Sieff Robert Sargeant, Adrienne Ponzo and James Wessels are charged with bank fraud, wire fraud or money laundering conspiracies. According to the complaints, Rivera recruited owners of businesses with minimal operations, Smith and Ponzo prepared false applications and tax returns, Rivera took 15 to 50 percent of loan proceeds, and Wessels made fake payroll checks to support a forgiveness application. Yasha Barjona and William Ingram pleaded guilty before U.S. District Judge Karen Williams; they received about $724,300 and $551,600 in PPP and EIDL proceeds.

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PRESS RELEASE



Five Individuals Charged in Multi-
State COVID-19 Relief Program
Fraud Scheme
Wednesday, July 19, 2023


For Immediate Release
U.S. Attorney's Office, District of New Jersey


Two Others Plead Guilty
riveraetal.complaint.pdf (424.36 KB)
CAMDEN, N.J. – Five individuals were charged for their roles in fraudulently obtaining
federal Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans
(EIDL) and for laundering the loan proceeds, U.S. Attorney Philip R. Sellinger announced
today. Two other individuals pleaded guilty to fraudulently obtaining PPP and EIDL
loans.

Eric Rivera, 43, of Norcross, Georgia, is charged by complaint with one count of
conspiracy to commit bank fraud, one count of conspiracy to commit wire fraud, and
one count of conspiracy to commit money laundering. He made is initial appearance in
federal court in the Northern District of Georgia and was released on $10,000 unsecured
bond. Lisa Smith, 60, of Cornelius, North Carolina, and Sieff Robert Sargeant, 43, of
Island Park, New York, are charged by complaint with one count of conspiracy to
commit bank fraud and one count of conspiracy to commit money laundering. Smith
had her initial appearance in the Western District of North Carolina and was released on
$25,000 unsecured bond. Sargeant is scheduled to make his initial appearance today
before Magistrate Judge Ann Marie Donio in Camden federal court.

Adrienne Ponzo, 48, of Bear, Delaware, is charged by complaint with one count of
conspiracy to commit wire fraud, and remains at-large. James Wessels, 53, of
Middletown, Delaware, is charged by complaint with one count of conspiracy to commit
money laundering. He made his initial appearance before Judge Donio and was released
on $100,000 unsecured bond.

According to the criminal complaints:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted
in March 2020 and was designed to provide emergency financial assistance to the
millions of Americans who are suffering the economic effects caused by the COVID-19
pandemic. One source of relief provided by the CARES Act was the authorization of
hundreds of billions of dollars in forgivable loans to small businesses for job retention
and certain other expenses, through a program referred to as the Paycheck Protection
Program (PPP). The CARES Act also authorized the Small Business Administration to
provide Economic Injury Disaster Loans (EIDLs) of up to $2 million to eligible small
businesses that were experiencing substantial financial disruption due to the COVID-19
pandemic.

To obtain a PPP or EIDL loan, a qualifying small business was required to apply and
provide information on its operations, including the number of employees and
expenses. In addition, businesses generally had to provide supporting documentation.

According to documents filed in these cases and statements made in court:

In one conspiracy, Rivera conspired with Smith, Sargeant, and others to defraud the PPP
loan program. Rivera recruited individuals – including Sargeant – who owned businesses
with minimal operations, employees, revenues, and profits, and introduced them to
Smith. Smith prepared fraudulent PPP applications for these businesses and created
false tax returns that were created solely for purposes of applying for the PPP and EIDL
loans and were never submitted to the IRS. The applicants, including Sargeant,
electronically signed the applications, which were then submitted to lenders. Rivera
received payments of 15 to 50 percent of the loan proceeds for his role in orchestrating
this scheme.

In the second conspiracy, Rivera conspired with Ponzo and others to defraud the EIDL
loan program. He recruited individuals who owned businesses with minimal operations,
employees, revenues, and profits and introduced them to Ponzo, who prepared
fraudulent EIDL applications for these businesses and caused them to be electronically
submitted to the Small Business Administration. Rivera received payments of 15 to 50
percent of the loan proceeds for his role in orchestrating this scheme.

In the third conspiracy, Rivera conspired with Smith, Wessels, and Sargeant to structure
the PPP loan proceeds and paperwork to conceal that the proceeds actually were being
spent on non-payroll expenses. Rivera and Smith introduced Sargeant to Wessels, who
created fake payroll checks and provided them to Sargeant. Sargeant distributed the
fake payroll checks to friends and family members, who cashed the checks and returned
the majority of the cash to Sargeant. Smith then used the fake payroll documentation to
submit a loan forgiveness application for Sargeant’s business that falsely stated that
Sargeant spent 66 percent of the loan amount on payroll expenses.

The counts of conspiracy to commit bank fraud are each punishable by a maximum of
30 years in prison and a $1 million fine. The counts of conspiracy to commit wire fraud
are each punishable by a maximum of 20 years in prison and a $250,000 fine, or twice
the gross gain or loss from the offense, whichever is greatest. The count of conspiracy to
commit money laundering is punishable by a maximum of 10 years in prison and a
$250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest.

Earlier this month, Yasha Barjona, 67, and William Ingram, 43, each pleaded guilty before
U.S. District Judge Karen Williams to one count of bank fraud conspiracy.

According to documents filed in these cases and statements made in court:

Ingram and Barjona owned businesses with minimal operations, employees, revenues,
and profits. Rivera introduced Ingram and Barjona to Ponzo and Smith. Ponzo prepared
fraudulent EIDL applications for Ingram’s and Barjona’s businesses and Smith prepared
fraudulent PPP applications for Ingram’s and Barjona’s businesses. Ingram and Barjona
electronically signed and submitted these applications, which contained materially false
and fraudulent information about the businesses and included false tax returns that
were created solely for purposes of applying for the PPP and EIDL loans and were never
submitted to the IRS. Ponzo and Smith also prepared fraudulent EIDL and PPP
applications for businesses controlled by associates of Barjona.

Barjona and his associates received approximately $724,300 in PPP and EIDL proceeds
and paid kickbacks to Rivera of approximately 50 percent of the loan amounts. Ingram
received approximately $551,600 in PPP and EIDL proceeds and paid kickbacks to Rivera
of approximately 15 percent of the loan amounts. After Ingram received the PPP loans,
Rivera and Smith introduced Ingram to Wessels, who prepared fake payroll documents
to conceal that the proceeds were being spent on non-payroll expenses. Sentencing for
Ingram’s sentencing is scheduled for Nov. 7, 2023, and for Barjona, Nov. 15, 2023.

U.S. Attorney Sellinger credited special agents of the Federal Deposit Insurance
Corporation – Office of the Inspector General, under the direction of Patricia Tarasca,
Special Agent-in-Charge, New York Regional Office; special agents of the FBI’s South
Jersey Resident Agency, under the direction of Special Agent in Charge Jacqueline
Maguire in Philadelphia; special agents of the Social Security Administration, Office of
the Inspector General, New York Field Division, under the direction of Special Agent in
Charge Sharon MacDermott; and special agents of the U.S. Department of Labor, Office
of the Inspector General, Northeast Region, under the direction of Special Agent in
Charge Jonathan Mellone, with the investigation leading to the charges and guilty pleas.

The government is represented by Assistant U.S. Attorney Daniel A. Friedman and
Attorney-in-Charge Jason M. Richardson of the U.S. Attorney’s Office’s Criminal Division
in Camden.

The charges and allegations contained in the complaints are merely accusations, and the
defendants are presumed innocent unless and until proven guilty.

barjona.information.pdf (128.76 KB)
riveraetal.complaint.pdf (424.36 KB)



ingram.information.pdf (108.98 KB)

Updated July 19, 2023

Topic
CORONAVIRUS


Component
USAO - New Jersey
Press Release Number: 23-206


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