The men approached the recording artist to help them steal millions from the CARES program funds.
James R. Stote, 55, of Hollywood, and Phillip J. Augustin, 52, of Coral Springs, Fla., Pleaded guilty in the Northern District of Ohio this month to “carrying out a national ploy aimed at fraudulently obtaining over $ 35 million in paycheck protection. Loan Program (PPP) guaranteed by the Small Business Administration (SBA) under the CARES Act (Coronavirus Aid, Relief, and Economic Security), ”according to federal authorities.
Court documents show the pair conspired to acquire millions of dollars in fraudulent PPP loans for Augustine’s company, Clear Vision Music Group LLC, using false documents demonstrating the need. After these documents were successfully submitted with the application, Stote and Augustin began work to secure even larger loans. They recruited additional applicants and prepared and submitted fraudulent applications for these individuals in exchange for a share of the money received. In doing so, Stote and Augustin submitted fake payroll numbers, IRS forms and bank statements, according to federal investigators. In total, the two men have filed nearly 80 fraudulent claims worth at least $ 35 million, and authorities are said to have proof that they did not stop there. Each of the men faces up to two decades in prison.
“These convictions, and the many convictions of others involved in this vast conspiracy, demonstrate that people will be held accountable for defrauding the P3 program,” said Deputy Attorney General Kenneth A. Polite Jr. of the Criminal Division. of the Ministry of Justice. “Fraud against PPP programs directly harms taxpayers and undermines public confidence in critical government support during the pandemic. We will continue to fight fraud and ensure that relief from COVID-19 goes to those who deserve it. “
“While many businesses in our communities relied on relief funds to keep their doors open and employees paid, these defendants took advantage of a scheme that stole millions of taxpayer dollars destined for struggling businesses and left them behind. spent generously on themselves, ”said First Assistant to the United States Attorney Michelle M. Baeppler for the Northern District of Ohio. “The theft of public funds will not be tolerated and prosecution for PPP fraud remains a priority for law enforcement. “
As part of the Stote and Augustine scheme, Diamond Smith, 37, was also recently sentenced to twenty months after pleading guilty in August in the Southern District of Florida to conspiring to commit wire fraud. Smith is a recording artist and has admitted to obtaining a PPP loan of over $ 426,000 for his company, Throwbackjersey.com LLC, using forged documents and false information. Smith then obtained another loan of over $ 708,000 for his other company, Blue Star Records LLC, using false documents. Smith admitted spending the money on luxury items, including a Ferrari, which was seized by authorities. He said he paid over $ 250,000 in bribes to Stote and Augustin for their help.
“When the Paycheck Protection Program was implemented over a year ago, our office made a commitment to protect Southern Floridians from those attempting to exploit the Covid-19 pandemic” , said U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida. “Our work is not done. We will continue to hold accountable those who wrongly obtain funds to help struggling small businesses survive the current health and economic crisis. “
Two Florida men plead guilty to $ 35 million COVID-19 relief fraud program