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NJ COVID Scammer Who Pocketed $1.8M In Taxpayer-Funded Rescue Loans Gets Three Years In Fed Pen

UPDATE: A North Jersey businessman who collected $1.8 million in COVID-19 pandemic loans that he wasn't entitled to, then diverted the money into accounts held by family members -- including his young children -- was sentenced to three years in federal prison on Wednesday.

IRS - Criminal Investigation
IRS - Criminal Investigation Photo Credit: IRS.GOV

Rocco A. Malanga, 39, formerly of Hackettstown, must serve out the entire plea-bargained sentence approved by a U.S. District Court judge in Newark on March 22 because there’s no parole in the federal prison system.

Malanga lied on documents to three different lenders to secure federal Paycheck Protection Program (PPP) money meant for distressed small businesses, U.S. Attorney for New Jersey Philip R. Sellinger and Assistant Attorney General Kenneth A. Polite, Jr., of the Justice Department’s Criminal Division jointly announced.

Among other things, Malanga jacked up the average monthly payroll, in part, by falsely reporting how many employees he had, they said.

Malanga took a deal from the government rather than face trial, pleading guilty Wednesday to one count each of bank fraud and money laundering.

Malanga was among hundreds of people charged, convicted or still being investigated by the Justice Department for trying to steal hundreds of millions of dollars from the taxpayer-funded PPP, which was designed to keep struggling small businesses afloat during the pandemic.

Congress had established the $670 billion rescue fund through the CARES Act, which was “designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic,” Sellinger said.

The program distributed an estimated $525 billion in forgivable loans to more than five million companies, saving an estimated 50 million jobs during one of the worst national crises in recent history.

Tens of thousands of those recipients, it turns out, weren’t eligible, federal authorities said.

Businesses were supposed to use PPP loans to cover payroll, mortgage interest, rent and utilities. The program allowed the interest and principal to be forgiven if businesses spent the proceeds on these expenses within a set time period and used at least a certain percentage of the loan towards payroll expenses.

It didn’t exactly work out that way in many instances, authorities said.

A Sussex County scammer, for one, identified people who’d been dead for years as business partners to help collect $1.9 million from the federal fund established to help struggling companies during COVID-19, authorities said.

SEE: Feds: Sussex Scammer Used Dead People’s Names To Collect $1.9M In COVID Relief

Another North Jersey scammer who collected $5.6 million in federal COVID-19 pandemic loans that he wasn't entitled to was about to board a flight to Pakistan when federal agents arrested him, they said.

SEE: Feds Nab Fleeing North Jersey Man Accused Of Pocketing $5.6M Small Biz Pandemic Loan

In addition to the prison term, U.S. District Judge Julien X. Neals sentenced Malanga to three years of supervised release and ordered him to pay back the $1.8 million.

Sellinger and Polite credited inspectors of the U.S. Postal Inspection Service and special agents of IRS – Criminal Investigation with the investigation leading to Malanga's arrest, plea and sentence, secured by Assistant U.S. Attorney Blake Coppotelli of the District of New Jersey and Trial Attorney Della Sentilles of the Fraud Section of the U.S. Department of Justice.

They also thanked the inspector general’s offices at the Federal Reserve Bank, the Federal Deposit Insurance Corporation and the Social Security Administration.

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