Plainview man pleads guilty to $4 million PPP fraud
HALE COUNTY, Texas (NEWS RELEASE) - A Plainview man admitted to defrauding pandemic-era financial programs out nearly $4 million, announced U.S. Attorney for the Northern District of Texas Leigha Simonton.
Andrew Travis Johnson, 58, was charged earlier this month and pleaded guilty Friday to three counts of bank fraud, one count of aggravated identity theft, and one count of engaging in monetary transactions in property derived from unlawful activity.
According to plea papers, Mr. Johnson admitted the he fraudulently applied for an obtained 27 Paycheck Protection Program (PPP) loans totaling almost $4 million.
He admitted he applied for loans on behalf of three entities: an actual business that provided contract speech and occupational therapy services, an actual nonprofit that organized community fundraisers for individuals with intellectual limitations, and a fictitious entity that never provided goods or services of any kind and had no employees.
In the business’s application, Mr. Johnson falsely claimed the company paid 49 employees an average of $441,667 per month and provided a fabricated IRS Form 940 that indicated it paid its employees more than $5.1 million in calendar year 2019. In actuality, the company employed about 10 individuals on an ad hoc basis and paid less than $100,000 in wages in 2019. Nevertheless, based on his application, the business qualified for a $1.1 million PPP loan, which it re-drew the following year, for a total of $2.2 million.
In the nonprofit’s application, he falsely claimed the organization employed 33 individuals (in actuality, it employed fewer than five), and in the application submitted on behalf of the fictitious entity, he falsely claimed the company employed 24 individuals (in actuality, the company did not exist). For each entity, he provided fabricated list of employees, some of which did not exist and others of which were clients, along with fabricated IRS forms. Nevertheless, he qualified for a $326,770 loan for the entity and a $523,00 loan for the nonprofit. He redrew a loan for the non-existent entity the following year for a total of $653,540.
Each entity sought – and received – forgiveness on the principal and interest on each of the small business PPP loans. Yet very little, if any, of the money was used for payroll or business expenses. Instead, Mr. Johnson spent nearly $3.5 million on home renovations, vacations, clothing, cosmetic surgery, college tuition, cars, wedding expenses, and equipment for a business.
In addition to the small business loans, Mr. Johnson also fraudulently obtained $436,524.80 in first and second draw loans for 11 purported independent contractors, several of whom were related to him.
At least four of the recipients were unaware that Mr. Johnson had used their identifying information to obtain the loans, nor did they ever receive any proceeds of the loans. Mr. Johnson opened bank accounts under the victim’s names, transferred to loan proceeds into the accounts, and obtained debit cards for each account; he used the cards to spend the loan monies.
Mr. Johnsons and others sought – and received – forgiveness on the principal and interest on each of the independent contractor loans, which ranged from roughly $15,000 to nearly $24,000 each.
Mr. Johnson now faces up to 102 years in federal prison. His sentencing date has not yet been set.
In plea papers, he agreed to pay more than $4 million in restitution.
The Federal Bureau of Investigation’s Dallas Field Office and IRS – Criminal Investigations conducted the investigation with the assistance of Homeland Security Investigations. Assistant U.S. Attorneys Ann Howey and Jeff Haag are prosecuting the case.
The Paycheck Protection Program (PPP) was authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted on March 29, 2020, to provide emergency financial assistance to Americans suffering economic hardship due to the COVID-19 pandemic. The PPP provided forgivable loans to small businesses to cover payroll, rent, and other certain business expenses; the program ended in May 2021.
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