MIDDLESEX COUNTY, NJ - A Middlesex County man has admitted to fraudulently accepting loans from the Payment Protection Program (PPP), which is designed to provide forgivable loans to small businesses impacted by the COVID-19 pandemic. Bernard Lopez, age 40, pleaded guilty by video conference to charges of bank fraud and theft of government funds, according to a press release from the Department of Justice.
On June 24th, 2020, Lopez submitted an application for a PPP loan on behalf of a company he controlled, identified in the press release as ‘Company-1.’ The application had falsely claimed that Company-1 had employed 25 people, paid monthly mortgage payments, and a monthly payroll of $192,000.
According to the DOJ, Mr. Lopez did not have any employees nor was he responsible for any monthly mortgages or payroll payments. Based on his false application, he was approved for $481,502 in federal COVID-19 emergency relief funds meant for struggling small businesses.
The funds were deposited into a corporate bank account under the name of Pezlo Management LLC, which Mr. Lopez controlled. Checks were altered and made out to Lopez for $211,886. He later withdrew or transferred the stolen proceeds from Pezlo’s bank account before the bank could detect the fraud.
Created by the CARES Act, the Payment Protection Program allocated $755 billion in forgivable loans for small businesses in April 2020. In the past year, The Justice Department has brought criminal charges against at least 209 individuals in 119 cases related to PPP fraud. Nearly $445 million in PPP loans were sought out by fraudsters and $246 million were actually obtained, according to a recent report from the Project on Government Oversight.
The count of bank fraud is punishable by a maximum penalty of 30 years in prison and a $1 million fine, or twice the gross gain to the defendant or gross loss to the victim, whichever is greater. The count of theft of government funds is punishable by a maximum of 10 years in prison and a fine of up to $250,000, or twice the gross gain or loss from the offense, according to the District Attorney’s Office.
Lopez pleaded guilty to these charges on Wednesday, April 21st. He will be sentenced on October 6th, according to the press release.