A North Jersey businessman fraudulently secured nearly $2 million in federal COVID-19 pandemic loans he wasn't entitled to, then diverted the money into accounts held by family members, including his young children, federal authorities charged.
Rocco A. Malanga, 48, of Hackettstown, “used a variety of false statements to fraudulently obtain approximately $1.8 million in federal COVID-19 emergency relief funds meant for distressed small businesses,” U.S. Attorney Craig Carpenito said Thursday.
He then diverted the Paycheck Protection Program (PPP) money to “accounts under the control of his relatives, including his minor children, and to another company that did not obtain a PPP loan,” Carpenito said.
Malanga is among nearly 60 people charged by the U.S. Justice Department since May with trying to steal more than $175 million from the taxpayer-funded PPP, which was designed to keep struggling small businesses afloat during the pandemic.
Several hundred more investigations -- involving nearly 500 suspects and hundreds of millions in loans – were continuing, federal authorities said.,
Congress in late March 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,” Carpenito 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.
Malanga in one instance, for instance, “submitted a PPP loan application on behalf of one of his companies that had supporting documentation that claimed that the company had 47 employees, a monthly payroll of $324,081, and paid employees approximately $3.9 million in total compensation for 2019,” Carpenito said.
However, he said, IRS records showed that the company paid no salaries or wages last year.
A federal judge in Newark released Malanga on a $750,000 unsecured bond following a video-conferenced initial appearance Thursday on wire fraud, bank fraud and money laundering charges.
Carpenito and Acting Assistant Attorney General Rabbitt credited inspectors of the U.S. Postal Inspection Service and special agents of IRS – Criminal Investigation with the investigation leading to Malanga's arrest.
They also thanked the inspector general’s offices at the Federal Reserve Bank, the Federal Deposit Insurance Corporation and the Social Security Administration.
Handling the case for the government are 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.
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