COVID Feature: High Risk, Low Reward

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Close-up Of A Businessperson's Hand Giving Cheque To Colleague At Workplace

Coronavirus has negatively affected millions of small businesses throughout the United States leaving them struggling to pay workers and keep their businesses afloat. The Paycheck Protection Program (PPP) is a loan through the Small Business Administration (SBA) intended to help small businesses keep workers on the payroll.

Under the PPP loan program, qualifying businesses received loans at a maturity of two years and an interest rate of just 1 percent. The loans are applied to payroll costs, rent, utilities, and mortgage payments. The interest and principal loan can be forgiven if the majority of the loan is allocated towards payroll expenses and prevents workers from losing their jobs.

Fraudsters have used the coronavirus pandemic as an opportunity to exploit the newly implemented financial safeguards meant to protect the economy and businesses. (No surprise there.) Andrew Marnell of Los Angeles, California is allegedly one of the many people who sought to take advantage of the PPP program. 

Marnell has been charged with one count of bank fraud as he stands accused of fraudulently seeking more than $8 million in PPP loans. He supposedly submitted fraudulent applications through financial institutions on the behalf of multiple companies. The company’s business operations and payroll expenses were greatly exaggerated or false. (I suppose this means he isn’t eligible for loan forgiveness.)

The applications were submitted using fraudulent federal tax filings and employee payroll records. Marnell allegedly used various aliases for the different applications. He was able to obtain $8.5 million in PPP loans through these applications. (You can be sure Each and every one of his aliases will be brought to justice.)

The millions of dollars in loans skimmed from the PPP loans were transferred to Marnell’s personal brokerage account. He spent a great portion of the money in stock market investments and gambling in Las Vegas at a casino. (Because the best way to hold onto wealth is to gamble it away or put it into a risky stock market.)

The Department of Justice has issued warnings they are working diligently to detect those who would seek to take advantage of programs meant to help the nation during this time of need. (Fraudsters trying to take advantage of the vulnerable? Groundbreaking.)

A few of the warning signs of PPP fraud are suspicious payroll numbers, companies falsifying the timelines of when they were created, and people applying for loans who only recently received their employee identification number.

Suspected fraud involving the Small Business Administration and any of their lender programs can be reported using their online form or by calling their hotline at 800-767-0385.

Today’s Fraud of the Day comes from an article, “LA man charged with receiving $8 million in COVID-19 scam,” published by on July 17, 2020

LOS ANGELES (KABC) — A Los Angeles man was arrested today and charged with fraudulently seeking more than $8 million in Paycheck Protection Program loans.

Andrew Marnell, 40, was taken into custody Thursday and charged in Los Angeles federal court by criminal complaint, unsealed upon his arrest, with one count of bank fraud, according to the U.S. Attorney’s Office.

 

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.