Minnesota man charged with covid-19 relief fraud
By a Biometrica staffer
A man from Minnesota was charged for allegedly defrauding the Paycheck Protection Program (PPP) of about $841,000, the US Department of Justice said in a statement. Kyle William Brenizer, 32, of St. Paul, Minnesota, was charged in a criminal indictment with wire fraud and money laundering in the District of Minnesota.
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.
Brenizer was the owner and manager of True-Cut Construction LLC (True-Cut), a contracting and construction company located in Brooklyn Park, Minnesota. True-Cut and Brenizer were ordered by the Minnesota Department of Labor and Industry to cease and desist from doing business in August 2018. In December 2019, True-Cut’s contractor license expired and was never renewed, the indictment alleges.
He allegedly submitted a false and misleading PPP application in the name of True-Cut seeking around $841,000, but the application was denied. Brenizer submitted a PPP application again seeking the same amount, in the name of True-Cut. But this time, he allegedly submitted the application under the name of another individual.
Brenizer falsely stated that True-Cut’s average monthly payroll was over $330,000 for about 30 employees. He also falsely certified that he was not subject to any pending criminal charges, even though he was allegedly named in multiple pending felony charges in the State of Minnesota for check forgery, identify theft, and theft by swindling.
Since his second application contained various misrepresentations and omissions, it was approved on May 13 and he received $841,000 in PPP funds. Instead of using the funds for permissible business expenses, Brenizer transferred around $650,000 to a bank account unrelated to True-Cut, made a $29,000 payment to purchase a Harley-Davidson motorcycle, and spent over $1,000 on golf expenses, among other expenses for his personal benefit, according to the allegations in the indictment.
The indictment was unsealed on Friday. Brenizer made his initial appearance before US Magistrate Judge Becky R. Thorson of the District of Minnesota and remains in custody. He will appear for a detention hearing on August 26.
The FBI, IRS-CI, FDIC-OIG and SBA-OIG investigated the case. Assistant Chief L. Rush Atkinson of the Department of Justice’s Criminal Division’s Fraud Section and Assistant U.S. Attorneys Matthew S. Ebert and Allison K. Ethen of the U.S. Attorney’s Office for the District of Minnesota are prosecuting the case.
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.