August 30, 2023
Laura L. Rubenstein
The District of Maryland Strike Force has struck! As one of three federal forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the CARES Act, the Strike Force has brought an indictment charging the Chief Executive Office of Baltimore’s PEI Staffing, LLC for wire fraud and money laundering, related to the submission of fraudulent PPP loan applications.
The 8-count indictment alleges that in 2020, PEI’s CEO committed fraud against the Small Business Administration and related financial institutions by obtaining and attempting to obtain Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) loan funds not for job retention and business needs, but rather, for his own personal use. The CEO allegedly submitted a loan application in the name of PEI Staffing LLC seeking approximately $1,307,170 in PPP funds. The application purportedly contained false statements and omissions such as the number of PEI Staffing employees, the wages paid to employees, and that any funds received would be spent on legitimate business expenses such as payroll, rent, and utilities. As detailed in the indictment, within four days of the fund disbursement, the CEO opened 4 personal bank accounts at 2 separate banks and subsequently transferred the PPP loan proceeds to those accounts for personal use. Such funds purportedly went towards the purchase of a Mercedes-Benz automobile, renovations to his home, installation of a pool, and other unauthorized expenditures.
This is the second highly publicized indictment from this Strike Force, which also recently indicted the former CEO of Strong City Baltimore for similar improprieties. Among the indictment was the CEO’s submission of PPP loan applications containing false statements such as varying amounts of average monthly payroll and the intended use of the loan funds. The CEO signed all the applications, certifying that any funds received would be used for allowed purposes and then sent notices internally that the funds would be used to cover shortfalls in Strong City’s accounting of some of its fiscal sponsorships.
If convicted, each CEO faces a maximum sentence of 20 years in federal prison for wire fraud and a maximum of 10 years in federal prison for each count of money laundering. An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.