Florida Man Pleads Guilty to Federal Charges for Fraudulently Obtaining and Laundering More than $4 Million in Paycheck Protection Program Loans

1 year ago

A Florida man pleaded guilty today in the District of New Jersey to fraudulently obtaining more than $4.6 million in Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration under the Coronavirus Aid, Relief and Economic Security Act, and subsequently laundering the loan proceeds through a series of illicit financial transactions.

According to court documents, Gregory J. Blotnick, 34, of West Palm Beach and formerly of New York City, submitted 21 fraudulent PPP loan applications to 13 lenders on behalf of at least nine purported businesses that Blotnick controlled, including BSC Opportunistic Equity LP and Brattle Street GP LLC. In these fraudulent applications, Blotnick falsified various information, including the number of his employees, the federal tax returns for his businesses, and payroll documentation. Blotnick sought more than $6.8 million in total PPP loans and obtained more than $4.6 million. Blotnick then laundered and misused the loan proceeds, including by transferring the funds to brokerage accounts that he controlled from which he placed more than $3 million in losing stock trades.

Blotnick pleaded guilty to one count of wire fraud and one count of money laundering. He is scheduled to be sentenced on March 1, 2022, and faces a maximum total penalty of 30 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney Rachael A. Honig for the District of New Jersey; Special Agent in Charge Robert Manchak of the Northeast Region of the Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG); Special Agent in Charge John F. Grasso of the Social Security Administration OIG (SSA-OIG) New York Field Division; Special Agent in Charge Patricia Tarasca of the Federal Deposit Insurance Corporation OIG (FDIC-OIG) New York Region; and Special Agent in Charge Michael Montanez of IRS—Criminal Investigation’s (IRS-CI) Newark office made the announcement.

The FHFA-OIG, SSA-OIG, FDIC-OIG, and IRS-CI are investigating the case.

Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Fatime Meka Cano of the U.S. Attorney’s Office for the District of New Jersey are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. Since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at https://www.justice.gov/criminal-fraud/ppp-fraud.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

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 (NCDF) Hotline at 866‑720‑5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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