Attorney charged for defrauding PPP of $9 mln
By a Biometrica staffer
An attorney from New Jersey was arrested on charges of defrauding the Paycheck Protection Program (PPP) by obtaining about $9 million in loans, the US Department of Justice said in a statement.
Jae H. Choi, a licensed attorney of Cliffside Park, was charged by criminal complaint, unsealed today upon his arrest, in the District of New Jersey with three counts of bank fraud and one count of money laundering.
The complaint alleges that Choi, 48, submitted three fraudulent PPP loan applications to three different lenders on behalf of three different businesses, which supposedly provided educational services. Choi allegedly fabricated the existence of hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications.
He also falsely represented to the lenders that the companies controlled by him had hundreds of employees and paid over $3 million in monthly wages, the complaint adds. Based on Choi’s alleged misrepresentations, each lender funded each of the three businesses with an approximately $3 million PPP loan. In total, Choi received nearly $9 million in federal COVID-19 emergency relief funds meant for distressed small businesses.
Choi allegedly used the fraudulently-obtained PPP loan proceeds to pay for numerous personal expenses, including buying a nearly one million-dollar residential home in Cresskill, to fund roughly $30,000 in remodeling and other improvements, and to invest millions more in the stock market through an account held in the name of his spouse.
PPP & the CARES Act
Established by the Coronavirus Aid, Relief and Economic Security (CARES) Act, the PPP provides small businesses with necessary funds to remain operational despite the severe economic hit from the covid-19 pandemic.
The CARES Act is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects of the covid-19 pandemic, and was enacted as federal law on March 29. One source of relief 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, Congress authorized over $300 billion in additional PPP funding.
Through PPP, qualifying small businesses and other organizations are eligible to receive loans with a maturity of two years and an interest rate of 1%. 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.
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.