United States Attorney for the Central District of California Nicola T. Hanna, along with Acting Assistant Attorney General Brian C. Rabbitt of the Criminal Division of the Department of Justice, announced the charges made against a California man on October 16, 2020, for engaging in a fraudulent scheme that was designed to swindle the United States government’s Paycheck Protection Program (PPP) out of around $9 million in bank loans.
Andrew Marnell, 40, has been served with a criminal complaint and has been charged with one count of bank fraud, in violation of 18 USC § 1344, after illegally obtaining approximately a $9 million loan through a fraudulent scheme that targeted the US government’s Paycheck Protection Program.
The criminal complaint filed against the defendant alleges that he has submitted fraudulent loan applications to different insured financial institutions through the PPP, on behalf of several different companies. The complaint further alleges that the defendant has received approximately $9 million in PPP loans through his fraudulent scheme. The defendant’s tactic was revealed in the investigation, wherein it was shown that all the loan applications to different banks submitted by the defendant through the US government’s PPP were fraudulent, and contained false information, glaring omissions, and misleading statements regarding the companies’ respective business operations. It also was reported that the defendant submitted altered documents particularly, forged federal tax filings and employee payroll records. Apart from falsifying documents, investigations also revealed that the defendant had submitted loan applications through the government’s PPP, under different aliases, for several different companies.
With his new, illegally obtained wealth, the defendant allegedly engaged in risky trades in stock-market bets by transferring the proceeds from the PPP loans to his brokerage account. Additionally, the defendant also actively spent hundreds of thousands from the proceeds of the PPP loan on making bets and playing games at the Bellagio Hotel & Casino, among at least two other Strip casinos in Las Vegas.
Reports on the defendant’s illegal uses of the PPP loan proceeds revealed that he had had a net loss of over $500,000 in May 2020, and a net loss $2,773,455.40, for the month of June 2020 alone, according to his brokerage account. Furthermore, information from the Bellagio Hotel & Casino noted that the defendant was present in the casino and was actively gambling from July 9 to July 11, 2020, where he lost over $150,000 in just a span of two days.
The defendant was also found to have been recently fired from a credit analyst position at the Wells Fargo company after being found in an investigation in 2018 that the defendant has been embezzling money from the company through a company credit card to support his gambling addiction.
The Payroll Protection Program is being administered by the United States Small Business Administration as a part of the $2.2 trillion Coronavirus Aid Relief and Economic Security (CARES) Act – a federal law that was enacted in March of 2020 as a response to the COVID-19 pandemic, in order to provide emergency financial assistance to American citizens who are suffering from the economic distress that the pandemic has brought to the nation. The program offers loans to businesses, in which it is specified that proceeds from the PPP shall be used only on certain permissible expenses, including interests on mortgages, payroll costs, rent, and utilities. Additionally, the Payroll Protection Program has declared the authorization of up to $349 billion in forgivable loans, where interests and principal on the PPP loan shall be entirely forgiven, if and only if, the business is able to utilize 60% of the loan proceeds on payroll expenses and spend the loan on the aforementioned permissible expenses within a designated period of time. All loans made through the Paycheck Protection Program are fully guaranteed by the U.S. Small Business Administration.
In April of 2020, the Congress has authorized additional PPP funding amounting to over $300 billion. The Paycheck Protection Program currently allows qualifying small business and other eligible organizations to receive loans with a maturity of two years, and an interest rate of only one percent.
Investigations on the case were made by the Federal Bureau of Investigations, the Federal Deposit Insurance Corporation – Office of the Inspector General, and the Federal Housing Finance Agency – Office of the Inspector General, along with the Internal Revenue Service – Criminal Investigation, the Treasury Inspector General for Tax Administration, and the Small Business Administration Office of Inspector General. The California Department of Justice – Bureau of Gambling Control also assisted in the investigation, in which the collaborative efforts of the aforementioned law enforcement agencies have, ultimately, resulted to the bringing of justice to the atrocious acts of criminals who are currently taking advantage of the pandemic that is severely affecting the whole nation.
As a result of the successful investigation, the prosecution of the million-dollar case involving the Paycheck Protection Program fraudulent scheme is currently being handled by the Trial Attorney Scott Armstrong of the Department of Justice – Criminal Division’s Fraud Section, along with the Assistant United States Attorney Kerry Queen of the Central District of California.
On the morning of July 16, 2020, Andrew Marnell was arrested by the federal authorities. The defendant has subsequently made his initial court appearance in the afternoon of July 16, 2020, at the United States District Court in Los Angeles. During the court hearing, prosecutors have noted that the defendant’s approximated $9 million defrauded loans may increase in amount as the investigation continues. Furthermore, the defendant was ordered detained, pending a hearing on July 21, 2020. The defendant is facing a statutory maximum sentence of 30 years in federal prison.
With the provided criminal documents containing allegations that are not evidence of guilt, the public is reminded that the defendant shall be presumed innocent and is entitled to a fair trial at which the state has the burden of proving guilt beyond a reasonable doubt.
Further information regarding any possible allegations of attempted fraud involving the Paycheck Protection Program, the Coronavirus Aid Relief and Economic Security (CARES) Act, and other COVID-19 related schemes shall be reported to the National Center for Disaster Fraud of the Department of Justice by contacting them through their Hotline at (866)-720-5721, or through their NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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