DOJ busts NFL player and dozens of others accused of trying to steal $175 million in PPP loans
The Department of Justice has arrested more than 50 individuals alleged to have fraudulently obtained loans through the government's signature program for helping small businesses hurt by the coronavirus pandemic.
Those charged by the agency include National Football League player Josh Bellamy. Bellamy, who until recently was a wide receiver for the New York Jets, obtained over $1.2 million in federally backed assistance for his company, Drip Entertainment. Prosecutors said Bellamy used a large share of the money, which was intended to help small businesses keep workers on the payroll, for personal expenses, including spending nearly $63,000 at the Seminole Hard Rock Hotel and Casino in Hollywood, Florida. Bellamy was taken into custody on Thursday morning.
The Jets declined to comment. A source close to the team said Bellamy was no longer on the Jets roster. Bellamy could not be reached for comment.
At least 57 people accused of wrongfully receiving Paycheck Protection Program loans — ranging in size from $30,000 to $24 million and totaling $175 million — have been charged since May, federal officials said in a press conference on Thursday. Individuals spent the loans on "frivolous material expenses," including sports cars and houses for personal use, said Craig Goldberg, deputy chief inspector at the United States Postal Inspection Service.
The Paycheck program made more than 5 million loans totaling $525 billion before closing to new applications last month. Yet many small business owners who were denied loans were left strapped for cash and had to lay off workers or even close their businesses.
"The money they stole was taxpayer money. Every dollar they took was a dollar we all set aside to help fellow Americans in the worst national crisis in history," Brian C. Rabbitt, acting assistant attorney general in Department of Justice Criminal Division, said Thursday.
The alleged fraudsters fall into two categories, according to the agency. The first includes individuals who claimed they were applying for loans to pay workers and cover other permitted expenses, but instead spent the money on luxury cars, home, renovations, diamonds, strip clubs and gambling.
For example, entrepreneur Lee Price III of Houston, Texas, who applied for loans under two separate companies, was charged with fraudulently obtaining more than $1.6 million in coronavirus relief funds. Price allegedly used the money to purchase a Lamborghini Urus sports car and a Rolex watch, as well as spending it on real estate transactions and at Houston strip clubs and night clubs, prosecutors claim.
Kenneth Gaughan, of Washington, D.C., was charged after obtaining $2.1 million in paycheck and Economic Injury Disaster loans, some of which he spent to purchase a 33-foot yacht, a 2020 Kia Stinger, and a Washington, D.C. row house.
The second category of fraudsters were allegedly involved in coordinated criminal rings including multiple individuals. Fraudulent activity resulted in losses of $70 million for the government, according to the Justice Department, which was able to recover or freeze more than $30 million in loans.
The agency said the multiple arrests should serve as a warning to those considering defrauding the government. Rabbitt said he expects more fraud related to the Paycheck program to be uncovered.
During the press conference, James Lee, deputy chief, Internal Revenue Service Criminal Investigation, issued a warning to criminals: "Those of you out there who think you're smart, who think you are staying under the radar because you aren't flaunting the stolen money, I am here to tell you that you're not smart, we all see you and you cannot hide from these paper and digital trials that you are leaving behind for us to follow."
