Two South Florida men accused of fleecing millions from SBA’s COVID-19 loan program
As the coronavirus shoved the nation’s economy off a cliff, Congress passed a rescue plan for small businesses totaling $650 billion in loans that would be forgiven if borrowers played by the rules.
A pair of South Florida businessmen got in line for the government bailout so many times with copycat loan applications that federal authorities are now accusing them of fleecing more than $10 million from the Small Business Administration’s Paycheck Protection Program for employees during the COVID-19 pandemic.
In June, Ross Charno, 46, of Fort Lauderdale, and James Richard Stote, 54, of Hollywood were arrested on charges of bank and wire fraud in an alleged conspiracy extending from South Florida to Ohio, according to a criminal complaint. Both were released on bonds in Fort Lauderdale federal court and now await their first appearances in federal court in Ohio where they will be charged by indictment.
Charno’s defense attorney, Brian Bieber, said the case against his client is in the initial stages.
“He was presented with an opportunity by others and foolishly became intimately involved,” Bieber told the Miami Herald Wednesday. “We’re still in the fact-gathering process and look forward to appearing in court virtually in the very near future.”
Stote, who is already serving probation for a third-degree felony conviction in state court, could not be reached for comment. No lawyer is listed as representing him on the court docket.
According to an FBI criminal affidavit, Charno and Stote joined the alleged SBA loan racket this spring and collaborated with an unnamed business person who is cooperating with investigators in the criminal case against them. That confidential witness has not yet been charged, but he was involved with the two South Florida men in applying for at least 18 Paycheck Protection Program loans while kicking back tens of thousands of dollars to both for their assistance in the scheme, the affidavit says.
“[The] defendants obtained these PPP loans both for their own companies and for others’ companies,” the FBI affidavit says. “When they obtained PPP loans for other companies, [they] expected to receive — and did receive — sizable kickbacks. To inflate the size of these PPP loans, and their corresponding kickbacks, [they] relied on a variety of false statements, including by submitting falsified bank statements and tax forms.”
In addition to helping the unnamed businessman in securing “fraudulent” PPP loans in Ohio, Charno and Stote are accused of obtaining other loans from the emergency SBA program for such companies as PM Autobody in Miami ($652,470), OMP Enterprises in Fort Lauderdale ($244,062) and USA Homes and Remodeling in Hollywood ($702,720), according to the affidavit.
The FBI’s case is built not only on fabricated bank statements and tax returns that appear identical in many loan applications, but also on text messages, emails and recorded phone calls between the confidential business person and the South Florida businessmen. An undercover agent also interacted with Charno and Stote, the affidavit says.
“Stote and Charno have submitted numerous PPP loan applications, and the evidence suggests that many, if not all, of those applications are fraudulent,” FBI special agent Matthew Scalisi concluded in the affidavit.
