17 NYC, NY Employees Charged With Fraudulent Pandemic Relief Loans Scheme

Seventeen New York City and state employees are facing charges for allegedly obtaining pandemic relief loans through a fraud scheme, federal officials said.

According to the complaint, as cited by the United States Attorney for the Southern District of New York Damian Williams, during the summer of 2020, some of those charged conspired to submit fake applications for loans to the SBA’s EIDL program. 

The fake loan applications were allegedly submitted in their names but made false claims about gross revenues and number of employees, and many of the applications claimed that the individuals accused operated hair and nail salons.

Additionally, others charged also submitted fake applications at various times in 2020 in their own names, according to prosecutors.

In these instances, the fraudulent applications allegedly claimed six-figure gross revenues for businesses that either did not exist, and if they did actually earned much less.

A number of these applications also claimed employees that they did not actually have.

According to prosecutors, those charged spent money received through these loans on personal expenses, including casinos, online gambling, personal stock investments, home furniture, electronics, and luxury clothing.

The IRS-CI and NYPD made the arrests Wednesday morning.

In total, 19 individuals are facing charges for this type of fraud, prosecutors said. Among them, 17 public employees, including individuals who worked for — or recently retired from — the NYPD, the New York City Department of Education, the New York City Department of Corrections, the New York City Department of Transportation, and the city’s Administration of Children’s Services. Individuals who worked for the MTA, the city’s Human Resources Administration and a non-profit in the city were also charged.

“Of those arrested today are civil servants, NYPD employees, and a Captain for the Department of Corrections,” IRS-CI Special Agent in Charge Thomas M. Fattorusso said. “These are individuals who held positions of trust and had strong, stable jobs while so many people struggled during the pandemic.  The message that these arrests are sending should be a clear one. Nobody is above the law and while the pandemic has receded from the headlines, IRS-CI’s commitment to bringing those who defrauded these programs to justice remains unwavering.”