PPP Loan Fraud at the Beach

It’s not always sunny for everyone on the Florida beaches. On January 30, 2023, the United States Attorney’s Office for the Middle District of Florida announced that Al Clint LaRoche of West Palm Beach pleaded guilty to two counts of bank fraud involving more than $1 million from the Paycheck Protection Program (PPP) loan program. LaRoche faces a maximum of 30 years in prison for each count.

Between April 2020 and April 2021, LaRoche submitted fraudulent First Draw and Second Draw PPP loan applications to a financial institution for his business, Bornwild, LLC. The loan applications contained numerous false statements and certifications, including Bornwild’s average monthly payroll, number of employees, and that the loan funds would be used for authorized purposes. Instead of using the $1,078,652.50 in PPP loan funds for authorized purposes, LaRoche used the money to purchase a Mercedes Benz SUV, jewelry, hotel and travel stays, numerous other retail purchases, and more than $350,000 in cash withdrawals.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted in March 2020 to provide emergency financial assistance to millions of Americans suffering the economic effects from the COVID-19 pandemic. Under the CARES Act, small businesses were eligible to receive forgivable loans equal to approximately 2.5 times the applicant’s average monthly payroll costs for job retention and certain other expenses such as mortgages, rent, and utilities. In some instances, small businesses were even able to receive a second draw equal to the first. From March 2020 to May 2021, the CARES Act provided approximately $800 billion in low-interest uncollateralized PPP loans.

Experts estimate that as much as $120 billion in PPP loan relief could be related to fraud. The Middle District of Florida has been at the forefront of identifying PPP loan fraud within the context of whistleblower investigations. In April 2022, the United States Attorney’s Office for the Middle District of Florida announced a settlement of a laboratory fraud scam for $24.5 million which also involved PPP loan fraud. See United States ex rel. Dawn Baker v. Physician Partners of America, LLC, No. 8:19-cv-00902 (M.D. Fl.).

PPP loan fraud, unfortunately, will likely be found from sea to shining sea.

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