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Gregory J. Blotnick applied to 13 lenders for 21 loans over a period of nearly a year, beginning in March 21, 2020, lying about the number of employees at nine companies whom he supposedly needed to pay, federal authorities said.
Blotnick, 34, dumped the money into a personal brokerage account instead, then poured nearly 45% of it into losing stock trades, Acting U.S. Attorney for New Jersey Rachael A. Honig and Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said in a joint release.
The government ended up charging him with 33 counts of grand larceny and fraud. Rather than risk trial, Blotnick took a deal from the government, pleading guilty on Wednesday to single counts of wire fraud and money laundering.
Blotnick is among dozens of people charged by the government with trying to steal from the taxpayer-funded Paycheck Protection Program (PPP), which was designed to keep struggling small businesses afloat during the pandemic.
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.
That didn't help more than 3,000 small businesses that were unable to raise money and went belly-up. At the same time, however, tens of thousands of ineligible recipients illegally helped themselves to PPP loans, federal authorities said. They became targets of federal investigators.
Blotnick, for instance, obtained $491,000 from Cross River Bank to purportedly cover payroll for 25 employees of one company, a complaint on file in U.S. District Court in Newark says. He put half of the money in an inactive trading account and wired the rest to a former investor he'd worked with, it says.
Blotnick followed up with applications for loans to TransPecos and Northeast Bank, collected $250,000 or so from each and dumped the money into personal accounts, the government said.
He bagged another $2.4 million combined from American Express National Bank -- by claiming he needed the money to pay 45 employees -- and from Ponce Bank for a purported 16 workers, authorities said.
"Blotnick falsified various information to the lenders, including the number of employees, the federal tax returns for his purported businesses, and payroll documentation," Honig and Polite said in their release.Overall, the bogus applications sought a total of $6.8 million in loans, they said.
U.S. District Judge Brian R. Martinotti scheduled a March 1, 2022 sentencing.
Honig, meanwhile credited special agents from several agencies: the FHA's Office of Inspector General, IRS – Criminal Investigation, the Social Security Administration's New York Field Division Office of the Inspector General, the FDIC Office of the Inspector General and the Board of Governors of the Federal Reserve System Consumer Financial Protection Bureau's Office of Inspector General with the investigation.The plea was secured by Assistant U.S. Attorney Fatime Meka Cano of her Government Fraud Unit in Newark and Trial Attorney Cory E. Jacobs of the Justice Department Criminal Division's Market Integrity and Major Frauds Unit, the U.S. attorney said.
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