Brooklyn man arrested for $1.9 million Paycheck Protection Program fraud

From brooklyneagle.com

Defendant allegedly fraudulently obtained funds intended for businesses, spent $350K on luxury cars

Leon Miles, 51, of Brooklyn was charged in Brooklyn Federal Court on Monday with wire fraud in connection to an alleged scheme to obtain more than $1.9 million from the Paycheck Protection Program, which is intended to help small businesses with payroll costs, interest on mortgages, rent and utilities.

He was arrested Monday morning and was slated to make his initial appearance before United States Magistrate Judge Vera M. Scanlon.

The complaint charges that in May 2020, Miles submitted an application for a $1,904,593 PPP loan on behalf of a limited liability company he owns in Brooklyn, falsely claiming that the company had 50 employees and a total average monthly payroll of $761,838. 

To support these claims, Miles allegedly submitted fraudulent personal and business tax returns and tax forms that were never filed with the IRS. In fact, the U.S. Attorney’s Office for the Eastern District charges, he reported to the IRS no taxable income during the relevant period and his company filed no tax returns and reported no wages paid to employees. 

The loan proceeds were disbursed to the defendant’s personal savings account, and within days he had withdrawn hundreds of thousands of dollars, some of which he used to purchase a 2020 Bentley Continental for approximately $250,000 and a 2020 Cadillac Escalade for approximately $100,000, the complaint charges.

The Paycheck Protection Program (PPP) was established by the CARES Act, a federal law enacted on March 29, 2020 to provide emergency financial assistance in connection with economic effects of the COVID-19 pandemic. The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses. The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs. 

“At a time when so many are suffering from the devastating economic effects of the ongoing pandemic, Miles allegedly enriched himself at the taxpayers’ expense, stealing funds that were intended by Congress to keep businesses afloat and workers on payroll,” said Seth DuCharme, acting U.S. attorney for the Brooklyn-based Eastern District of New York. 

“We continue to see people taking advantage of the Paycheck Protection Program, which was created to provide emergency financial assistance to businesses who need it during the pandemic,” said FBI Assistant Director-in-Charge William Sweeney. “This type of criminal behavior is a slap in the face to all of those who play by the rules, especially while so many in our communities are suffering from the financial fallout of the pandemic.”–>

“While most Americans are struggling during this pandemic, we see criminals over and over again trying to live out their dreams of a lavish lifestyle,” said IRS Criminal Investigation Special Agent-in-Charge Jonathan Larsen. 

The government’s case is being prosecuted by Assistant U.S. Attorneys Robert M. Pollack with assistance from Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Section.