COVID Feature: In for a Penny, In for a Pound

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The government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 to provide financial assistance to those who were impacted by COVID-19. Fraudsters have since used the nation’s vulnerability to take advantage of the programs and resources authorized by the CARES act. It appears that Keith Nicoletta, of Dade City, Fla., tried to take advantage of the CARES act by allegedly obtaining more than $1.9 million in Coronavirus relief funds he is not entitled to.

Nicoletta is charged with bank fraud and conducting illegal monetary transactions. He successfully obtained more than $1.9 million in Paycheck Protection Program (PPP) loans in May 2020. He claimed that he needed the funds to cover $760,000 in monthly payroll expenses for 69 employees at his scrap metal business. (Surprise, surprise, this was all a lie.) It turns out that he had not reported $9 million in wages to the State of Florida for 2019 or 2020.

None of the obtained funds went toward Nicoletta’s business or meeting payroll for his employees. He is accused of using the funds to purchase a 2020 Mercedes, a 2020 Ford truck, withdrawing over $100k in cash, and wiring approximately $537,000 dollars to a property management company located in South Florida. (I hope he took his new wheels for a joy ride down memory lane. It’ll be hard to remember what freedom feels like behind bars.)

The CARES act allocated $349 billion in government PPP loans to be distributed through the Small Business Administration (SBA). PPP loans are intended to help small businesses retain their employees by providing the funds they need to make payroll and to pay other business expenses. The SBA screens small businesses that apply for PPP loans and approves loans for ones that meet the qualifications. (Somehow, this shyster got approved.)

PPP loans have a maturity of two years and an interest rate of one percent. The interest and principal can be forgiven if the loans are used for payroll costs, interest on mortgages, rent, and utilities within a set time frame. (I don’t think anyone will be in a hurry to forgive Nicoletta’s debts.)   

The loans obtained by Nicoletta were laundered through multiple financial institutions in an attempt to hide that he wasn’t using the money for business expenses. Instead, Nicoletta purchased his Mercedes for approximately $106,000 and his special edition Ford F-250 pickup for more than $66,000. (Not a penny was put towards payroll expenses. No surprise there.)  

It is important to remember that Nicoletta is to be presumed innocent until proven guilty in a court of law. However, if convicted, he faces up to 40 years in federal prison.

If you suspect you are a victim of COVID-19 fraud or believe someone is committing fraud, contact the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or submit a NCDF Web Complaint Form.

Today’s Fraud of the Day comes from an article, “COVID Relief Scam: Florida Man Collects $1.9M, Buys Benz, Ford & Kept $100k Cash, Says Officials,” published by CBS Atlanta on October 31, 2020.

DADE CITY, Fla. (CW44 News At 10) – A Dade City man collected more than $1.9 million in Coronavirus relief funds to cover payroll expenses for 69 employees in his scrap metal business. Instead, he allegedly bought a 2020 Mercedes, 2020 Ford truck, withdrew over $100k in cash and wired the rest to a property management company in South Florida. Authorities say not a dime was used for payroll.

United States Attorney Maria Chapa Lopez announces the unsealing of a criminal complaint charging Keith William Nicoletta (48, Dade City) with bank fraud and illegal monetary transactions. Nicoletta was arrested earlier this week. If convicted, he faces a maximum penalty of 40 years in federal prison.

 

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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.