Paycheck Protection Program fraud target of new Palm Beach County task force

WEST PALM BEACH — The Palm Beach County State Attorney's Office and the Palm Beach County Sheriff's Office have formed a task force to help federal investigators arrest and prosecute people suspected of filing fraudulent claims for federal loans intended to help businesses survive the COVID-19 pandemic.

State Attorney Dave Aronberg said Wednesday that four investigators from the agency's Sober Homes Task Force will join two investigators specifically tasked with investigating fraud in the Paycheck Protection Program in forming the new task force.

Federal authorities are currently investigating a dozen local cases that will be transferred to local authorities and prosecuted in the state courts.

"We don't know how many cases there will be, but we will go where the evidence leads us," Aronberg said at a news conference, describing the federal program as one rife with fraud.

"We anticipate dozens of cases in a short period of time. (Paycheck Protection Program) money was easy to get and had to be spent quickly, so it was a recipe for fraud. Fraudsters thought they could get away it, but they were wrong."

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In white-collar fraud cases, 'we follow the money,' investigator says

Congress passed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security — or CARES — Act in March 2020. The economic stimulus bill was intended to help businesses suffering the economic effects caused by the COVID-19 pandemic.

Part of the bill created the Paycheck Protection Program, a Small Business Administration-backed effort providing small businesses with money to pay up to eight weeks of payroll costs, including benefits. The program ended in May 2021.

In recent months, the South Florida U.S. Attorney's Office has charged dozens of people with defrauding COVID-19 loan programs out of more than $150 million. The Palm Beach County State Attorney's Office assigned an investigator to a local FBI task force.

"It then became apparent that the fraud was so widespread that they needed additional assistance," Aronberg said Wednesday. "And that's why we have established our own task force with PBSO."

Ted Padich, chief investigator for the Sober Homes Task Force, explained the overlap of his group with the Paycheck Protection Task Force, saying that both crimes involve a form of white-collar fraud.

The Sober Homes Task Force was formed in 2016 as part of a countywide effort to crack down on fraudulent activity by drug-treatment centers and health care providers. State law makes it illegal for a health-care provider or a laboratory either to offer or provide any form of compensation to a drug-treatment center or a sober home for the referral of patients.

Those with private health insurance have proven especially valuable to some providers. Court records show they have ordered multiple urine tests each week for these patients and then billed their insurance companies for thousands of dollars in reimbursement payments. The providers then have kicked back some of that reimbursement money to whoever made the referral.

"As a matter of course in our investigations, we go through a lot of bank records," Padich said. "We go through insurance records, we get medical records and we have bank records. As in every white-collar fraud investigation, we follow the money."

Task force won't target businesses that struggled despite PPP loans

The Paycheck Protection Program task force announced its first arrest, with a 33-year-old Boynton Beach man being charged this month with obtaining more than $440,000 through the Paycheck Protection Program and other government programs provided by the CARES Act.

According to an arrest affidavit, Brandon Howard Sr. submitted fraudulent loan applications that included a variety of false statements, including his company's number of employees and monthly payroll amounts.

Authorities alleged that Howard submitted applications for a limited-liability corporation bearing his name, indicating that the company had 35 employees and paid $1.9 million in wages in 2019.

Howard has pleaded not guilty to two counts of organizing a scheme to defraud and single count of money laundering. His next court hearing is scheduled for April. An attempt to reach an attorney listed for Howard in court papers was not immediately successful.

"It's a good example of what lot of these cases will look like," Aronberg said. "A large loan is funded in the (Paycheck Protection Program), reportedly for keeping the business open, keeping the employees paid, and we find out that there are no employees. In many cases, there is no operating business at all."

Chief Assistant State Attorney Al Johnson said the new task force will also look into fraud reports submitted by the county's Inspector General's Office. In his fiscal 2022 report, Inspector General John Carey identified seven instances of CARES Act fraud totaling $131,478, including an alleged incident of a tenant forging documents to receive money for rental assistance.

Aronberg noted that the county loans and grants are separate from the Paycheck Protection Fund dollars provided by the Small Business Administration. He said the task force won't target businesses that were unable to repay federal loans because of financial hardships.

“That’s not what this is about,” Aronberg said. “This is about intentional fraud. These are people who went into this to try to deceive the government and steal taxpayer money by claiming they had a business that didn’t exist, by claiming it was for something that never occurred. That’s blatant fraud."

Julius Whigham II is a criminal justice and public safety reporter for The Palm Beach Post. You can reach him at jwhigham@pbpost.com and follow him on Twitter at @JuliusWhigham. Help support our work: Subscribe today.

This article originally appeared on Palm Beach Post: Task force targets Paycheck Protection Program fraud in Palm Beach County