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Jae H. Choi, 48, got the Paycheck Protection Program (PPP) funds from three lenders on behalf of non-existent businesses that he claimed provided educational services, an indictment returned by a grand jury in U.S. District Court in Newark alleges.
Choi fabricated the existence of hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications, claiming he paid more than $3 million in monthly wages, the indictment charges.
In one instance, Choi claimed in an email to a lender that he’d just told 150 of his employees they were losing their jobs because the PPP loan hadn’t come through yet, U.S. Attorney Craig Carpenito said Wednesday.
Choi allegedly said he’d “watched grown men and women crying” as a result.
In that same email, he said he “sincerely hope[d]” that the lender’s employee “would never find [himself] in this kind of situation,” Carpenito said.
Three of the four lenders gave Choi $3 million each in PPP loans, all of which were intended for small businesses hit hard by the pandemic, the U.S. attorney said.
The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in late March, is designed to provide emergency financial assistance to millions of Americans suffering economic hardship from the COVID-19 pandemic.
A source of the money is $349 billion in forgivable loans to small businesses for job retention and certain other expenses.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. The interest and principal are forgiven if businesses spend the proceeds on payroll costs, interest on mortgages, rent and utilities within a set time period and use at least a certain percentage of the loan towards payroll expenses.
Choi used the money he got from the PPP to buy the house in Cresskill, pay for $30,000 in remodeling and other improvements and invest millions more in the stock market through an account held in the name of his spouse. Carpenito said.
The indictment returned in federal court in Newark charges Choi with four counts of bank fraud, four counts of false statements on a loan application, one count of aggravated identity theft and one count of money laundering.
Carpenito credited IRS – Criminal Investigation, the U.S. Postal Inspection Service, the Small Business Administration Office of the Inspector General; and the Social Security Administration with making the case, handled by Assistant U.S. Attorney Andrew Macurdy and Trial Attorney Andrew Tyler of his office.
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