A Somerset County man was arrested today for his role in fraudulently obtaining over $860,000 in federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loan payments (EIDL), U.S. Attorney Philip R. Sellinger announced.
According to U.S. Attorney Sellinger, Butherde Darius, 49, of North Plainfield, is charged by complaint with bank fraud, wire fraud and money laundering.
According to documents filed in this case and statements made in court:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 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 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 1 percent.
Businesses must use PPP loan proceeds on payroll costs, interest on mortgages, rent, and utilities.
The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.
Darius submitted fraudulent PPP and EIDL loan applications on behalf of his purported business, Fabulous Appetizers LLC.
The applications contained fraudulent representations to the lenders, including a federal home loan member bank and the Small Business Administration (SBA), including bogus tax information from the IRS and certifications as to the number of employees and gross revenue of Darius’s business.
According to IRS records, many of the purported tax documents Darius submitted were never in fact filed with the IRS, and Darius fabricated the existence of employees and the revenue of his business.
Based on Darius’s alleged misrepresentations in his loan applications, he received approximately $862,000 in federal COVID-19 emergency relief funds meant for distressed small businesses.
Darius then spent the proceeds on personal expenses, including hotels and airfare, and made cash withdrawals of over $58,000.
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.