On May 9, the Department of Justice (DOJ)  announced the sentencing of two Florida men, Phillip J. Augustin and James Stote for leading a nationwide scheme to defraud the Paycheck Protection Program (PPP) for loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  

According to court documents, Augustin and Stote used falsified documents to obtain a PPP loan for Augustin’s company, Clear Vision Music Group LLC. After submitting that application, Stote and Augustin recruited additional PPP loan applicants and prepared and submitted fraudulent loan applications on their behalf in exchange for a share of the loan proceeds. Augustin, a manager for professional football players, used his network of business contacts to recruit loan applicants. According to the government, Augustin and Stote used fake payroll numbers, falsified IRS forms, and deceptive bank statements to obtain the loans. Stote facilitated at least seventy-nine fraudulent loan applications worth at least $35 million. Among those loans, Augustin was responsible for at least thirty-four fraudulent loan applications worth at least $15 million.

Twenty-five people were charged in total for their participation in the scheme in the Northern District of Ohio, Southern District of Florida, and Middle District of North Carolina. Stote and Augustin both plead guilty to conspiracy to commit wire fraud on Dec. 14, 2021. Augustin was sentenced to 78 months in prison and Stote to 120 months in prison. In addition to his prison sentence, Stote was ordered to pay approximately $10.1 million in restitution and over $1.1 million in forfeiture. Augustin was ordered to pay more than $5.9 million in restitution and more than $272,000 in forfeiture.

Since the inception of the CARES Act, the Fraud Section has prosecuted over 150 defendants in more than ninety-five criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds. Last year, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government in an effort to combat and prevent pandemic-related fraud. The DOJ also persistently urges anyone with information about allegations of attempted fraud involving COVID-19 to report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations and PPP investigations. If you need assistance with such a matter, please contact us today.