The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law in March of 2020 and through several programs and allowances, it provides relief to businesses and individuals hurt by the COVID-19 pandemic. Since September 2021, the U.S. Department of Justice (“DOJ”) has made several announcements related to former professional athletes and their co-conspirators pleading guilty to defrauding COVID-19 relief programs.
For example, in September of 2021, Chilivis Grubman attorneys discussed former NFL players pleading guilty to defrauding a health care program set up by the NFL to benefit former players. The health care program entitled former NFL players to tax-free reimbursement of up to $350,000 in medical expenses. Weeks later, CG attorneys discussed former NFL player Kenbrell Thompkins pleading guilty to identity theft and fraud involving COVID-19 relief funds. In December of 2021, CG attorneys discussed another former NFL player who was sentenced to federal prison for his involvement in a scheme to defraud the Paycheck Protection Program (PPP), a federal loan initiative designed to help businesses pay their employees and meet expenses during the COVID-19 pandemic. Joshua Bellamy was convicted of using false information and falsified documents to obtain a PPP loan of $1,246,565 for his company, Drip Entertainment LLC.
Most recently, on August 1, the DOJ announced another PPP scheme involving several former athletes and their tax preparers from Mana Tax Services (Mana Tax). Thanh Ngoc Rudin, a California tax preparer and principal of Mana Tax, pleaded guilty to conspiring with others in schemes to defraud the IRS and the PPP.
According to the DOJ, from June of 2019 through July 2021, Thanh Rudin conspired with others to prepare and file false and fraudulent income tax returns with the IRS on behalf of at least nine professional athletes. The false tax returns reported fabricated business and personal losses to generate undue refunds. Mana Tax then charged the athletes a fee of 30% of the resulting refund.
Thanh Rudin and his co-conspirators also used Mana Tax to apply for PPP loans on behalf of several small businesses owned by the co-conspirators. The government referred to such business as “shell entities” because they had little to no employees or real business operations. To obtain the PPP loans, Rudin and his co-conspirators were accused of inflating the number of employees and monthly payroll costs claimed on the PPP loan applications and submitting falsified tax returns in support of the applications. In exchange for processing the applications, Mana Tax charged a fee of 30% of the value of the loan received.
The two schemes resulted in total losses of more than $25 million. Thanh Rudin is scheduled to be sentenced on November 9, facing a maximum penalty of five years in prison for the conspiracy charge and 20 years in prison for wire fraud.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations and trial. If you need assistance with such a matter, please contact us today.