PPP Fraud
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  1. #1
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    PPP Fraud

    YIKES!!!




    “In the depths of the COVID-19 pandemic, Martinez lied to get money that was supposed to help people. His abuse of the system during a terrible time has now been brought to light. Martinez took advantage of his employees, a tax preparer, and the public at large — all to fund a lavish lifestyle of cars, jets, and fancy homes. Let me be clear, this Office will not tolerate such conduct and will continue to bring to justice those who put their greed above the law,” says U.S. Attorney Damian Williams.

    The primary owner and CEO of MBE Capital Partners helped distribute $823 million in PPP loans to 36,600 businesses. Rafael Martinez earned $71.3 million in lender fees and purchased luxury cars, homes, and a chartered jet service. He will now lose it all after pleading guilty to one count of conspiracy to commit wire fraud.

    Early in the pandemic, Martinez applied for a PPP loan for MBE Capital Partners. In the application, he claimed that the company had 15 employees with a monthly payroll of almost $120,000. In reality, MBE Capital Partners had four employees at most with a monthly payroll of $25,000. Martinez provided doctored, fraudulent tax records which included a forged signature of a tax preparer. The company was approved for a $283,000 PPP loan.

    Within five days of applying for a PPP loan, Rafael applied to become a non-bank PPP lender. According to the application, MBE originated and serviced more than $3.8 billion in business loans from 2017 to 2019 and had the fraudulent financial statements to support this. The SBA approved MBE as a non-bank PPP lender.

    Three weeks later, the same fraudulent financial statements that were submitted to the SBA were provided to a life insurance company. Martinez formed a partnership with the life insurance company to fund PPP loans for minority and women-owned small businesses. After the company provided $100 million to MBE, the money was instead used as collateral to borrow $832 million through the Payment Protection Program Liquidity Facility.

    As part of the plea agreement, Martinez will pay more than $71.7 million and forfeit $44.5 million. This includes five luxury vehicles and properties in the Dominican Republic and New Jersey that law enforcement previously seized.

    Source:
    DOJ Press Release
    Kevin Henry
    VP-Business Development
    Seacoast Business Funding, a division of Seacoast Bank
    561-850-9346
    Kevin.Henry@SeacoastBF.com
    1880 N Congress Ave., Suite 404
    Boynton Beach, FL 33426

  2. #2
    Quote Originally Posted by Hedley Lamarr View Post
    YIKES!!!




    “In the depths of the COVID-19 pandemic, Martinez lied to get money that was supposed to help people. His abuse of the system during a terrible time has now been brought to light. Martinez took advantage of his employees, a tax preparer, and the public at large — all to fund a lavish lifestyle of cars, jets, and fancy homes. Let me be clear, this Office will not tolerate such conduct and will continue to bring to justice those who put their greed above the law,” says U.S. Attorney Damian Williams.

    The primary owner and CEO of MBE Capital Partners helped distribute $823 million in PPP loans to 36,600 businesses. Rafael Martinez earned $71.3 million in lender fees and purchased luxury cars, homes, and a chartered jet service. He will now lose it all after pleading guilty to one count of conspiracy to commit wire fraud.

    Early in the pandemic, Martinez applied for a PPP loan for MBE Capital Partners. In the application, he claimed that the company had 15 employees with a monthly payroll of almost $120,000. In reality, MBE Capital Partners had four employees at most with a monthly payroll of $25,000. Martinez provided doctored, fraudulent tax records which included a forged signature of a tax preparer. The company was approved for a $283,000 PPP loan.

    Within five days of applying for a PPP loan, Rafael applied to become a non-bank PPP lender. According to the application, MBE originated and serviced more than $3.8 billion in business loans from 2017 to 2019 and had the fraudulent financial statements to support this. The SBA approved MBE as a non-bank PPP lender.

    Three weeks later, the same fraudulent financial statements that were submitted to the SBA were provided to a life insurance company. Martinez formed a partnership with the life insurance company to fund PPP loans for minority and women-owned small businesses. After the company provided $100 million to MBE, the money was instead used as collateral to borrow $832 million through the Payment Protection Program Liquidity Facility.

    As part of the plea agreement, Martinez will pay more than $71.7 million and forfeit $44.5 million. This includes five luxury vehicles and properties in the Dominican Republic and New Jersey that law enforcement previously seized.

    Source:
    DOJ Press Release
    I don't understand how people like this think they can get away with this. Makes no sense.

  3. #3
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    Quote Originally Posted by FlexibleCapitalSolutions View Post
    I don't understand how people like this think they can get away with this. Makes no sense.
    There is a WHOLE lot more of this to come......... Right down to the guy who took 3,000 in PPP and misrepresented the SBA
    Kevin Henry
    VP-Business Development
    Seacoast Business Funding, a division of Seacoast Bank
    561-850-9346
    Kevin.Henry@SeacoastBF.com
    1880 N Congress Ave., Suite 404
    Boynton Beach, FL 33426

  4. #4
    Senior Member Reputation points: 122949 BR-Nightmare's Avatar
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    Quote Originally Posted by FlexibleCapitalSolutions View Post
    I don't understand how people like this think they can get away with this. Makes no sense.
    'Merica
    The Brokers Nightmare
    I don't want peace, I want problems, ALWAYS!
    Florida-Based

  5. #5
    Senior Member Reputation points: 72398 Olderguy's Avatar
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    My former boss bought half of an equipment finance company and they ran all their PPP through a SBA bank because the CEO gave them a .25 kickback....why he wouldn't let me do it....
    Steve Benjamin
    Professional Business Loans

    522 Contessa
    Irvine, CA 92620
    steveprobiz@gmail.com
    https://probizloans.net/
    Broker, Underwriter, general business loan expert
    949.228.1050


    @ 24 hour funding working capital loans
    @ Term loans from 3 years to 10 years at 9.5% and up
    @ Equipment financing up to 7 years
    @ Property loans - Hard Money and traditional - Primary, Investment, commercial, land, fix and flip, construction.
    @ SBA loans - 7A and 504.
    @ Private money equity and debt for major investments
    @ Personal Loans up to gross income from personal tax return.

  6. #6
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    hey give the little guy a chance to defraud the government, the big boys do it for multi billions in ukraine.
    I actually know some guys that went to jail for defraud on PPP loans. Pretty pathetic

  7. #7
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    wasn't he partners or somehow connected to magic johnson for the ppp loans ?

  8. #8
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    Quote Originally Posted by Michael I View Post
    wasn't he partners or somehow connected to magic johnson for the ppp loans ?
    Magic Johnson may no longer be playing in the NBA, but the Hall of Fame member is still making valuable assists.

    Johnson announced that EquiTrust Life Insurance Co., of which he owns a majority, is providing $100 million in capital to fund federal loans for minority and women business owners who have been hit hard by the coronavirus pandemic.

    Kurt Huffman owns the restaurant group ChefStable in Oregon.
    These small business owners got PPP loans, but they're afraid to use the money
    EquiTrust will work with MBE Capital Partners, a lender that specializes in asset-based loans for minority-owned small businesses, to distribute the loans through the federal government’s Paycheck Protection Program.

    The loans are aimed at supporting people of color and women who operate businesses in underserved communities, according to a news release.

    The news was first reported by The Wall Street Journal.

    “These are incredible businesses, small businesses, that have been the pillar of our community that also employ a lot of black and brown people in our community,” Johnson said Sunday on MSNBC. “… We wanted to make sure that minority-owned businesses got small business loans through the PPP program.”

    Concerns about people of color accessing loans
    The partnership was borne out of a concern that women and people of color were having difficulty accessing the loans offered by the Small Business Administration’s emergency coronavirus relief program – part of the federal government’s massive stimulus package.

    “Johnson’s EquiTrust is providing critical financial support to underserved communities and businesses that have been traditionally neglected,” EquiTrust and MBE Capital Partners said in a joint news release. “These small and diverse businesses often have difficulty developing strong lending relationships with big banks.”

    The goal is to help 100,000 businesses secure resources that will sustain them through the pandemic, MBE Capital CEO Rafael Martinez said on MSNBC.

    SBA program has come under criticism
    The Paycheck Protection Program has been plagued by technical hiccups and questions about whether lenders were prioritizing the businesses that needed the money most after several deep-pocketed companies received loans, including the Los Angeles Lakers – the storied NBA franchise that Johnson was long affiliated with. The team returned the money.

    After the initial $349 billion Congress allocated to the program ran dry, lawmakers replenished the fund with an additional $310 billion. Still, there have been concerns that money earmarked for smaller lenders is running low.

    Advocacy organizations say businesses owned by people of color are inherently at a disadvantage. The funds are accessed through banks and participating SBA lenders – relationships that people of color are less likely to have.

    Nurse practitioner Capri Reese talks to a patient and holds her hand while a doctor administers an IV at Roseland Community Hospital in Chicago, Tuesday, April 28, 2020. (Ashlee Rezin Garcia/Chicago Sun-Times via AP)
    The coronavirus pandemic is hitting black and brown Americans especially hard on all fronts
    The Center for Responsible Lending estimated in April that approximately 95% of black-owned businesses, 91% of Latino-owned businesses, 91% of Native Hawaiian or Pacific Islander-owned businesses and 75% of Asian-owned businesses were unlikely to receive a PPP loan through a mainstream bank or credit union.

    The federal CARES Act, which created the Paycheck Protection Program, instructed the SBA to prioritize underserved and rural markets. But a recent inspector general report found that the agency had not communicated this priority to lenders.

    The report also found that the SBA did not require demographic data to identify borrowers of the program in underserved markets, making it hard to determine how much funding was going towards the intended communities.
    Last edited by Kevin Henry-Seacoast; 04-03-2023 at 02:59 PM.
    Kevin Henry
    VP-Business Development
    Seacoast Business Funding, a division of Seacoast Bank
    561-850-9346
    Kevin.Henry@SeacoastBF.com
    1880 N Congress Ave., Suite 404
    Boynton Beach, FL 33426

  9. #9
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    I don't understand how he had the bandwidth to facilitate that kind of volume nor how he earned commissions over 8% on PPP while the max allowed was 1%. How do you collect 36,000 PSF's?

  10. #10
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    they starting to go after the smaller loans
    https://www.justice.gov/usao-edmo/pr...mic-loan-fraud

  11. #11
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    Quote Originally Posted by Michael I View Post
    they starting to go after the smaller loans
    https://www.justice.gov/usao-edmo/pr...mic-loan-fraud
    Wait till you see the news regarding people in the financial services industry that come off as big shots that got caught receiving small amounts of PPP. It's gonna suck getting popped for bank fraud and defrauding the federal government.
    Kevin Henry
    VP-Business Development
    Seacoast Business Funding, a division of Seacoast Bank
    561-850-9346
    Kevin.Henry@SeacoastBF.com
    1880 N Congress Ave., Suite 404
    Boynton Beach, FL 33426

  12. #12
    Senior Member Reputation points: 72398 Olderguy's Avatar
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    Quote Originally Posted by Hedley Lamarr View Post
    Wait till you see the news regarding people in the financial services industry that come off as big shots that got caught receiving small amounts of PPP. It's gonna suck getting popped for bank fraud and defrauding the federal government.
    Yup I know several including my former boss.
    Steve Benjamin
    Professional Business Loans

    522 Contessa
    Irvine, CA 92620
    steveprobiz@gmail.com
    https://probizloans.net/
    Broker, Underwriter, general business loan expert
    949.228.1050


    @ 24 hour funding working capital loans
    @ Term loans from 3 years to 10 years at 9.5% and up
    @ Equipment financing up to 7 years
    @ Property loans - Hard Money and traditional - Primary, Investment, commercial, land, fix and flip, construction.
    @ SBA loans - 7A and 504.
    @ Private money equity and debt for major investments
    @ Personal Loans up to gross income from personal tax return.

  13. #13
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    What's really wild....... PPP records are public. You can find anyone that received PPP by searching the records. There is also a whistle blower reward program. If someone reports someone who illegitimately received PPP funds they can get up to 30% of the recovered amount......and them watch this person go to jail for defrauding the government, falsifying records, and bank fraud.
    Kevin Henry
    VP-Business Development
    Seacoast Business Funding, a division of Seacoast Bank
    561-850-9346
    Kevin.Henry@SeacoastBF.com
    1880 N Congress Ave., Suite 404
    Boynton Beach, FL 33426

  14. #14
    Veteran Reputation points: 159073 J.Celifarco's Avatar
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    Wait till they start looking at the ERC's and the amount of fraud with that
    John Celifarco
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    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
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    Email: john@horizonfundinggroup.com

  15. #15
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    They already have.......
    Kevin Henry
    VP-Business Development
    Seacoast Business Funding, a division of Seacoast Bank
    561-850-9346
    Kevin.Henry@SeacoastBF.com
    1880 N Congress Ave., Suite 404
    Boynton Beach, FL 33426

  16. #16
    Senior Member Reputation points: 16767 fundinggrasshopper's Avatar
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  17. #17
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    Some criminals and those who assisted them stole millions of dollars. Really stupid people stole much less and will face the same demise.
    Kevin Henry
    VP-Business Development
    Seacoast Business Funding, a division of Seacoast Bank
    561-850-9346
    Kevin.Henry@SeacoastBF.com
    1880 N Congress Ave., Suite 404
    Boynton Beach, FL 33426

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