Oh My Fraud

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[00:00:00] Narrator : In the world of fraud, cases are pursued by two separate yet equally important groups the Small Business Association, who investigates the crime, and podcasters [00:00:10] who ridicule those who commit the crime. These are their stories.

[00:00:17] Earmark CPE: If you'd like to earn CPE credit for listening to this [00:00:20] episode, visit earmark Cpcomm. Download the app, take a short quiz, and get your CPE certificate. Continuing education has never been [00:00:30] so easy. And now on to the episode.

[00:00:38] Caleb Newquist: This is on My Fraud, a true crime [00:00:40] podcast where crooks push papers around a desk instead of people out of windows. I'm Caleb Newquist.

[00:00:45] Greg Kyte: And I'm Greg Kite.

[00:00:47] Caleb Newquist: Greg, I know that you like [00:00:50] a little self-esteem boost right at the top of the show. So would you like me to read a recent five star review?

[00:00:57] Greg Kyte: I would.I would love for you to read a recent five [00:01:00] star review, but only if it's complimentary of both our swearing and our theme music.

[00:01:06] Caleb Newquist: You are in luck, my friend. Here we go. [00:01:10] Torque comma, it's me writes on Apple Podcasts Best Accounting podcast. Every episode is interesting and informative and you can earn CPE. [00:01:20] Love the hosts, love the swearing and love the theme music.

[00:01:24] Greg Kyte: Awesome. Love all around Caleb. Even for our producer Zach Frank who picked the theme music. Who [00:01:30] needs Zoloft when you've got reviews like that? I'm flushing my prescription of Zoloft down the toilet right fucking now. Uh, if your love for oh my fraud knows [00:01:40] no bounds rate the show or leave us a review. And also remember, we are available as keynote speakers and in-house trainers on fraud and ethics. So if that's something you'd like, [00:01:50] send us an email at oh my fraud at earmark Cpcomm for pricing and availability. Yeah.

[00:01:57] Caleb Newquist: Who knows, maybe we'll even bring in a band to play the theme music. [00:02:00] Okay, Greg, here's a question. Yes. Is there anything in your past that you sometimes worry will come back to haunt you?

[00:02:08] Greg Kyte: Oh, yeah, 100%, [00:02:10] uh, old stand up bits that haven't aged well.

[00:02:14] Caleb Newquist: Oh, yeah.

[00:02:14] Greg Kyte: Yeah. Oh, yeah. I mean, I really, I that's, I think that's every stand up comedian. I've been doing [00:02:20] stand up comedy for over 20 years now and stuff that seemed edgy. Uh, you know, 15, 20 years ago is like full on cringe y. Yeah. [00:02:30] Now, uh, like, for real. There's stuff that I wrote and performed way back then that at the time, like literally, I was like, this is great. I'm, I'm a total ally. [00:02:40] And now, like when I like, look up, look up my stuff on YouTube or whatever and watch it, I'm like, Jesus Christ, I hope I never get nominated to become a Supreme Court justice, [00:02:50] because this is gonna, like, make my confirmation hearings so difficult for me and for President Michelle Obama. Like it will. [00:03:00] It'll be the worst. And I don't want to do that to her. But it's out.

[00:03:04] Caleb Newquist: There I understand. Yeah, I understand, all right.

[00:03:07] Greg Kyte: Yeah. What about you? You got any, any any, uh, [00:03:10] land mines that you planted in the past?

[00:03:12] Caleb Newquist: I mean, so as many as a lot of our listeners know, I used to run a website called Going Concern. Uh, you wrote [00:03:20] for it, Greg. I did remember that. Yeah, yeah, you did. You wrote. You wrote a lot of funny push.

[00:03:23] Greg Kyte: You pushed me hard on that. Yeah. Content.

[00:03:26] Caleb Newquist: No, I mean, that's what I do.

[00:03:27] Greg Kyte: You did a good job.

[00:03:28] Caleb Newquist: Yeah, yeah. Anyway, so I ran [00:03:30] that site for a long time, uh, from June of oh nine to May of 2018. Uh, and so over the course of that time, it's probably fair [00:03:40] to say that I made lots of people mad.

[00:03:44] Greg Kyte: Uh, yeah. Yeah, I would think so. You know.

[00:03:46] Caleb Newquist: I was, you know, I was a journalist and a blogger and a gossip and everything [00:03:50] that entails those things. Yeah. Um, you know, I was I was airing a lot of the accounting world's dirty laundry. And so, you know, some of it was [00:04:00] important dirty laundry and some of it was not right. Maybe you you you could call it petty.

[00:04:06] Greg Kyte: It's, uh. Well, in. Yeah. Okay. [00:04:10] I'm not gonna fight you on that.

[00:04:12] Caleb Newquist: So sometimes I think about the stuff that I wrote and, you know, in the past and, and and, you know, maybe people who were [00:04:20] in those articles are holding grudges, and that might come back to me in some way. But, you know, it's been nearly six years since I ran Going Concern. So, I don't know, I, [00:04:30] you know, I don't think about it too much, but every once in a while, like, I'll stumble across something or some memory will pop in my brain and I'll wonder if someone like Steve Buscemi's [00:04:40] character and Billy Madison is out there with, like, my name on a list.

[00:04:44] Greg Kyte: Like, like polishing a rifle. Yeah, yeah, yeah, that would be. That would be horrible. I hope [00:04:50] that's the case. Yeah.

[00:04:51] Caleb Newquist: No. Yeah. No, I hope so. Yeah. But that I mean that's, that's, that's more or less. Well yeah, I'd have to think real hard if there's anything else, but that's, that's mostly [00:05:00] that's similar.

[00:05:01] Greg Kyte: That's similar to a fear I have from when I was a public school teacher. There's one student that I had back when I taught middle school math. Yeah, where I'm like, if I ran into [00:05:10] him, like in public and he just cold cocked me in the face, I'd be like, I deserved that one.

[00:05:15] Caleb Newquist: Had that coming.

[00:05:16] Greg Kyte: I had that coming. So there's one one student out of the hundreds [00:05:20] that I had, there was one who was like, yeah, you you get that, you get that one for free. I get a free one. I actually agree with you. So.

[00:05:26] Caleb Newquist: Uh uh.

[00:05:27] Greg Kyte: Well, well, for most people, the Covid 19 pandemic [00:05:30] is slowly becoming a distant memory. Uh, one day, people remember it as a time when they learned how to. Bake sourdough bread, or when they realize that they were married to someone [00:05:40] who was weird or that they didn't like very much.

[00:05:43] Caleb Newquist: Yet for other people, the pandemic marks a time when they made some very poor decisions.

[00:05:48] Greg Kyte: Yeah, like that ivermectin [00:05:50] and bleach enema that I experimented with.

[00:05:53] Caleb Newquist: Oh, I wasn't actually talking about that. Oh, I was, uh, I was talking about people who decision. Well, I [00:06:00] mean, it sounds like it could have been. It could have worked out fine.

[00:06:03] Greg Kyte: It didn't.

[00:06:04] Caleb Newquist: Okay. All right. Well, anyway, what I was referring to was people who decided to get pandemic relief [00:06:10] aid fraudulently.

[00:06:11] Greg Kyte: Oh, I did not experiment with that.

[00:06:13] Caleb Newquist: Oh, well that's good. Today we're talking about PGP, Eidl, IRC, etc., etc., etc.. The [00:06:20] US government provided more than $1 trillion in pandemic aid, an enormous amount, some estimates put it at more than $200 billion of it was given to, quote, [00:06:30] potentially fraudulent actors.

[00:06:33] Greg Kyte: And recently, the Department of Justice's Covid 19 Enforcement Task Force released its [00:06:40] 2024 report. And since there was some good stuff in there, we thought we'd talk about it today.

[00:06:52] Caleb Newquist: Okay. [00:06:50] Greg. The Covid 19 Fraud Enforcement Task Force 2024 report came out in April [00:07:00] of 2024. And here is something from the executive summary. Lay it.

[00:07:04] Greg Kyte: On me.

[00:07:05] Caleb Newquist: Yeah, I got it. The Covid 19 Fraud Enforcement Task Force is pleased to present [00:07:10] in this 2024 report, a compilation of its member agencies accomplishments to date to combat pandemic fraud. While the Cftf. That is not a great acronym, [00:07:20] but its government tiff, the CFE tiff has made significant progress to identify, investigate and punish Covid 19 fraud. Substantial [00:07:30] work remains in the face of numerous challenges.

[00:07:34] Greg Kyte: That's, uh, that's I think that's telling right there that we're already this the pandemic. I mean, we're so [00:07:40] far past the pandemic, but they're like, we're just getting started, honestly.

[00:07:45] Caleb Newquist: And I mean, I think if you if you check out this report, which of course is in the show notes, [00:07:50] they say right in there, they recent I don't remember when this was. Maybe you do Greg, but I think it was maybe last year where they extended the statute of limitations. So like they're going to be they're basically [00:08:00] going to be prosecuting people for the rest of the decade. Like it's just there.

[00:08:04] Greg Kyte: Which makes sense. They got there was so much that was done. I'm glad that they I mean, we could have a whole conversation [00:08:10] about why do statutes of limitations exist to begin with.

[00:08:14] Caleb Newquist: Right. Okay. So the attorney general established the CFF. [00:08:20] Yep. Uh, in 2021. And since its inception, it's, uh, charged over 3500 defendants. [00:08:30] It is over. It has over 400 civil settlements and judgments and over $1.4 billion in fraudulently obtained CARES [00:08:40] act funds seized or forfeited.

[00:08:43] Greg Kyte: Which is comical when you've already said that they estimated $200 billion [00:08:50] of, uh, funds were, you know, that they estimate. So it's like, oh wow, you got one, you got point zero, you got point 7% of [00:09:00] that back. Yeah. Good work.

[00:09:02] Caleb Newquist: There's it's weird because I feel like I've seen other numbers floating around in terms of the amount they've recovered. And it isn't clear to how much has [00:09:10] actually been recovered. Right. But what is clear that it is a fraction teeny of the amount that they suspect was obtained fraudulently. [00:09:20]

[00:09:20] Greg Kyte: But but again, if they got the rest of 2020s to I mean, hopefully that number will get significantly larger, but there's no way they're going to get all of it right. [00:09:30] I would be shocked if they even got a quarter of it back.

[00:09:33] Caleb Newquist: Yeah. So one other fun detail in this Covid 19 Fraud Enforcement Task Force [00:09:40] 2024 report is that they have set up the Department of Justice set up strike teams, which I love. I love a strike team. Um, who doesn't [00:09:50] who doesn't love a strike team? Yeah, right. They have what they call a, uh, a Covid 19 fraud enforcement strike force across six federal districts. Okay. [00:10:00] To. And they and these, these strike forces essentially pursue the most impactful criminal COVID fraud cases. And they either involve large amounts of loss overseas [00:10:10] actors, violent offenders and perps who defrauded multiple pandemic aid programs.

[00:10:18] Greg Kyte: Okay. Yeah. Makes sense.

[00:10:19] Caleb Newquist: And the [00:10:20] and the and the five strike forces are the district of Maryland, the southern district of Florida. There's a joint task force in the eastern and central districts of California, [00:10:30] new Jersey and Colorado. So those are the five. Okay.

[00:10:34] Greg Kyte: Seems like there's a lot of geography just left uncovered by that. Yeah there is. You're in Colorado. [00:10:40] You must be a hotbed of of, uh, of illegal activity, clearly. I mean, Utah, we're really the sainthood state. So I get it that they don't. They're like, we're good. [00:10:50]

[00:10:50] Caleb Newquist: Okay, with all that background, let's get into a few more cases of pandemic relief. Fraud.

[00:11:02] Greg Kyte: Datelined, [00:11:00] Maryland. In February of 2022, twin brothers, Jerry and [00:11:10] Jaleel Phillips of Capitol Heights, Maryland, were initially charged with obtaining more than $1 million in PGP and Eidl loans and [00:11:20] unemployment insurance benefits. Because, Caleb, if you remember, they had retooled unemployment to be very, very generous for anyone who lost their jobs at this time. [00:11:30] I had several comedian friends who were so happy that they got laid off during the pandemic because they're like this, uh, this sweet, sweet unemployment money is going to let me, [00:11:40] uh, do standup, uh, with impunity till this, uh, I mean, never mind. There was no place to do stand up. But they were. That was at least the on Zoom.

[00:11:49] Caleb Newquist: Yeah. Where [00:11:50] they couldn't hear the where they couldn't hear the laughing.

[00:11:52] Greg Kyte: Yeah. Where, where comedy went to die. Um, uh, regardless, uh, twin brothers Jerry and Jaleel, uh, created [00:12:00] numerous financial and email accounts with aliases like Kenneth Williams, Jamal Hopkins, and Allen Gator. That's the best one there. [00:12:10]

[00:12:10] Caleb Newquist: Allen I like the Allen.

[00:12:11] Greg Kyte: Allen Gator. Uh, yeah. That's where they're like. They're like, I dare you to arrest me, bitches. That's basically what an alias of [00:12:20] Allen Gator says. Uh, those aliases, uh, had fake Maryland driver's licenses behind them, along with bogus Social Security numbers and [00:12:30] birth dates. And at the time that the twins were charged, the DOJ alleged that they used the money to purchase a 2020 Camaro, [00:12:40] uh, furniture, home improvement items and services. And they also opened, quote, multiple accounts in popular digital currency [00:12:50] exchange platforms. Because nothing says I didn't do anything wrong like a full Bitcoin wallet.

[00:12:57] Caleb Newquist: I have to say, in this era, in this, [00:13:00] you know, the the early 2020s, if, if, if you are, uh, accused of something of, of a financial crime [00:13:10] or maybe any crime at all, and there isn't a cryptocurrency con element, I feel like you're doing it wrong. Yeah, there has to be a there has to be a crypto [00:13:20] there. There has to be crypto something. Right? Right.

[00:13:23] Greg Kyte: Yeah. Yeah. Exactly. And you know, and just the whole, you know, I would say for some reason I do feel [00:13:30] like peep loan fraudsters and crypto bros wear the same clothes that like, they're indistinguishable [00:13:40] just in appearance.

[00:13:42] Caleb Newquist: They certainly fancy the same kinds of cars.

[00:13:44] Greg Kyte: That's I mean, yeah, it's it's it's not a, it's not a I haven't it's not a proven theory, I'll [00:13:50] give you that. But it's, it's it's a good hunch. It's a good hunch.

[00:13:53] Caleb Newquist: It's a good hunch is what it is.

[00:13:54] Greg Kyte: Okay. So again we got the two brothers, Jerry and Jaleel. Jaleel pleaded guilty in [00:14:00] November of 2022 to federal wire fraud conspiracy. And Jerry pleaded guilty in February of 2023. And when Jerry pleaded guilty, [00:14:10] uh, he got hit with federal wire fraud, conspiracy, aggravated identity theft, which is when you steal someone's identity and you're just upset about it. [00:14:20] And illegal possession of a machine gun because nothing says I didn't do anything wrong, like owning a fucking machine gun. [00:14:30] Authorities also recovered four ghost guns in total from Jerry that he had purchased online, using one of the fake aliases from the app [00:14:40] Fraud.

[00:14:40] Caleb Newquist: They love that.

[00:14:41] Greg Kyte: Yeah. Who? The authorities. Yes. Oh, yeah. Yeah. You know, because it really makes untraceable.

[00:14:49] Caleb Newquist: I bought an untraceable [00:14:50] gun with a fake name.

[00:14:52] Greg Kyte: Oh, right. Right. Sounds fun. What's wrong? Second amendment bitch?

[00:14:56] Caleb Newquist: Uh, right. Yeah. Answer for everything, dude.

[00:14:58] Greg Kyte: But. But with these ghost [00:15:00] guns, he illegally modified one of them into a machine gun capable of firing multiple rounds with one pull of a trigger, because that's what a machine gun is. Maybe he needed.

[00:15:09] Caleb Newquist: It [00:15:10] for that aggravated identity.

[00:15:11] Greg Kyte: Theft. Yeah, he just to just to shoot some bullets through some fake, uh, driver's licenses. Yeah, that's probably it. Um, since all of this [00:15:20] was clearly how legislators intended pandemic relief funds to be used, Jaleel was sentenced in June 20th 23 to 30 months in prison, and machine gun Jerry got sentenced [00:15:30] to seven years.

[00:15:34] Caleb Newquist: Dateline Florida in October 2023. The US Attorney's Office for [00:15:40] the Southern District of Florida brought charges in 17 separate cases against employees of the Broward County Sheriff's Office. Eight of these folks were in [00:15:50] law enforcement, nine in the Department of Detention. According to the Department of Justice, these were, quote, independent schemes to defraud the Small Business Administration and participating [00:16:00] lenders through the Paycheck Protection Program and the Economic Injury Disaster Loan Programs. When the charges were announced, the defendants were accused of receiving nearly half $1 [00:16:10] million in assistance unlawfully. Okay, Greg. Yeah, 17 people and apparently not a conspiracy. Does that seem.

[00:16:18] Greg Kyte: Weird? Yeah, [00:16:20] this was a conspiracy.

[00:16:22] Caleb Newquist: Was it just like a hotbed of like, it was bad behavior? I mean, like, we're all.

[00:16:26] Greg Kyte: They're all in the same. Yeah, they're all in all the same employer, county [00:16:30] sheriff's office. Right. Or or, uh, the same department of detention. Yeah. In Florida. Yeah. This was a conspiracy. These guys, these guys were telling each other how to [00:16:40] do it. At least there was. Yeah, there was at least like a luncheon. Learn that happened there.

[00:16:44] Caleb Newquist: Definitely. One. Former sheriff's deputy, Stephanie [00:16:50] Diane Smith of Sunrise, Florida, was convicted of two counts of wire fraud at a trial in March 2023. Quote. Smith applied for and received [00:17:00] two PPE loans for herself as a sole proprietor, doing business as children first basketball training and Agape Smith Vending, respectively. I don't know [00:17:10] what those names are. No idea what? What are those? No, no.

[00:17:13] Greg Kyte: Those those names are, uh, no need to investigate here. These are clearly charities.

[00:17:19] Caleb Newquist: Yeah. Yep. [00:17:20]

[00:17:21] Greg Kyte: Uh, these.

[00:17:24] Caleb Newquist: Businesses. These applications were based on material [00:17:30] false information about each businesses. Total amount of gross income for the year 2019, including a falsified IRS tax form submitted with each application. Smith also sought and received forgiveness of [00:17:40] both fraudulently obtained PGP loans, which totaled over $31,000 in principal and interest.

[00:17:45] Greg Kyte: That is very interesting that she didn't get away with it [00:17:50] with only 31,000. 31,000 was dust on the scales for this thing. You know, it's one of those.

[00:17:55] Caleb Newquist: Things where, I suppose if you would have let me let me ask you this, Greg, [00:18:00] if you obtain pandemic aid funds fraudulently. Yeah. Do you then try to figure out a way to [00:18:10] pay it back, or do you just double down and go for the forgiveness?

[00:18:14] Greg Kyte: Oh, you absolutely double down and go for the forgiveness, especially with that.

[00:18:17] Caleb Newquist: That's what happened here.

[00:18:18] Greg Kyte: But that was the thing I [00:18:20] because if you if, if you remember some of the minutia of the PGP loan forgiveness program, there was all these hoops that you had to jump through and prove that you [00:18:30] spent it in the right way, and then like, right at the finish line, uh, somebody, somebody who was in charge of PGP was like, you know what? If your loans were [00:18:40] under $150,000, just forget it. We're just we don't even fucking care. Just just keep the goddamn money, and we're. You're good. That's how [00:18:50] that with. Which was crazy because my because I had I applied for two different PGP loans for two of the businesses that I'm in charge of, and we got them. It was not I think combined [00:19:00] they were less than $50,000 total, and I was keeping my finger on the pulse of what I'd have to do and make sure I had all the documentation for forgiveness. But I had all [00:19:10] of my friends who ran firms who were just, you know, sweating, going, oh, I gotta take care of this for all my clients and I. And there's all these things and all these rules, and everything's changing every minute. And I [00:19:20] was like, going, yeah, fortunately, I've just got two loans I have to worry about. It's pretty easy stuff. I'm just going to kind of hold on till the dust settles. And then everything sort [00:19:30] of landed in my lap where it's like, oh, oh, I'm good. Okay, cool. So like I said, I see $31,000 for children first basketball training and Agape [00:19:40] Smith vending. And I go, why is it this. Well, you even said they were going after big offenders. This isn't this must have been low hanging fruit, not big.

[00:19:48] Caleb Newquist: Well, I think I think the I think [00:19:50] the I think there's two things at play here. Number one, it's a law enforcement. It's law enforcement. It's Broward County Sheriff's Office. Yeah. Okay. And so the corruption [00:20:00] I guess is probably the factor there, whether it was 300 or it was $30,000. I think the fact that more than a dozen, uh, employees [00:20:10] of the county sheriff. Yeah. Uh, was the draw.

[00:20:14] Greg Kyte: That makes sense. And and and an aggregate that was only one one of the players. So. Right. [00:20:20] Aggregate. It was probably a lot of money they're talking about.

[00:20:22] Caleb Newquist: So I will say Smith was the only one that I saw who went all the way to trial. Okay. Based on the most reported [00:20:30] most, most recent reporting that I found, uh, for the 17 have been sentenced and most of them have got, you know, probation and ordered to pay restitution. And given the fact [00:20:40] that the actual dollar amount, even in the aggregate, isn't that much compared to a lot of the stories that we've told, it doesn't surprise me that most of them got like, you know, probation and stuff, but [00:20:50] there's still a lot of pending cases. And there were I, you know, I noticed that in a couple there's a couple of sergeants, I think there was a lieutenant. So like in terms of like the rank [00:21:00] of some of these, uh, uh, sheriff's employees, uh, some of them were, you know, they weren't they weren't nobodies. Yeah.

[00:21:08] Greg Kyte: But also interesting thought experiment. [00:21:10] If you send a a Department of Detention officer to jail.

[00:21:16] Caleb Newquist: Yeah.

[00:21:17] Greg Kyte: Uh, that's that's not gonna you. [00:21:20] I mean, that's that's mercy to say you can just have you can just be in a house arrest, bro. Yeah. So. Yeah.

[00:21:26] Caleb Newquist: Okay. You want more Florida?

[00:21:28] Greg Kyte: I always want more Florida. [00:21:30]

[00:21:30] Caleb Newquist: You got it, man. All right. On March 7th, 2024. Andre. Laki. Laki Laki, 39, of Miami. [00:21:40] He was sentenced to 71 months in prison for fraudulently obtaining Covid 19 relief loans and grants under the PGP, Eidl and the Shuttered Venue Operators grant. Greg, have you [00:21:50] heard of that one? I can't believe I've never heard of that.

[00:21:52] Greg Kyte: I've never heard of the Shuttered Venue Operators grant. There's part of me that wonders if it was maybe a Florida specific program.

[00:21:59] Caleb Newquist: You [00:22:00] know what? Now that I think about it, I think it had to do with bars and restaurants. I think it was one of the I think it was early in the pandemic, and I think it was. And some somebody [00:22:10] who's out there that knows this better than we do will probably send in a, you know, a wise ass email. But that, that [00:22:20] as, as you were talking there that just kind of like it kind of bounced around my brain. I'm like, oh, that might have been one of the earliest programs. Well, I'll tell you, as it related to bars and restaurants.

[00:22:28] Greg Kyte: Bars and restaurants took it hard. [00:22:30] Yeah. For the pandemic.

[00:22:31] Caleb Newquist: Yeah. Yeah. Especially early on. Yes. So maybe that's what that was. Yeah. In any case law K, he was holding himself out [00:22:40] as a tax preparer and in so doing obtained approximately $4.4 million in Covid relief funds from his fraudulent scheme. [00:22:50] And he used the proceeds to, quote, purchase, among other things, two Tesla S models a Lamborghini Urus, [00:23:00] yes, a Porsche Panamera GTS, a diamond AP watch, a rose gold and diamond pendant with his company's logo, [00:23:10] a half kilogram gold chain with 70 carats of diamonds and a one kilogram gold chain. This guy crap. Yeah.

[00:23:19] Greg Kyte: That's [00:23:20] that's that's some heavy chains, man.

[00:23:22] Caleb Newquist: Heavy chains? Yeah. Heavy chains.

[00:23:25] Greg Kyte: A2a 2.2 pound gold chain. I [00:23:30] mean, it's like.

[00:23:30] Caleb Newquist: 70, 70 carats of 70 carats of diamonds is kind of insane.

[00:23:34] Greg Kyte: Yeah, he he wants to get mugged.

[00:23:38] Caleb Newquist: Yeah. Anyway, [00:23:40] uh, if you get a chance, believe it or not, his Instagram is still out there. Oh, so go check that out. Uh, lots of posing with cars and jet [00:23:50] skis and jewelry. It's it's basically a rap video. Is it? Okay? You know, that's what's going on. And it is, it's it's fantastic. But, uh, but [00:24:00] yeah, some nice, some nice loot. Yeah. But, uh, yeah, he got caught 71 months. And, um, someone else has those 70 carats of diamonds.

[00:24:09] Greg Kyte: Now, [00:24:10] I guess the nice thing is, is that's one of those. If that once those there were assets to seize with him. Indeed. Right. Instead of he didn't just spend it all on champagne [00:24:20] and cocaine. He actually you can you can. There's resale value with a 2.2 pound gold necklace.

[00:24:27] Caleb Newquist: But what I'm not sure about is the [00:24:30] the rose gold and diamond pendant with his company logo. Yeah. Who's going to want that?

[00:24:35] Greg Kyte: I do, I'll take it. I'll wear that with pride. Okay. Right along with my Arthur [00:24:40] Anderson polo shirt.

[00:24:42] Caleb Newquist: All right, one more Florida story.

[00:24:44] Greg Kyte: Yes, please.

[00:24:45] Caleb Newquist: All right. On February 5th, 2024, Maritza morales [00:24:50] and Hermoso, 58, of Miami, was sentenced to 70 months in prison for laundering. Was a 70 months I like they like this ballpark 70 months. I think these judges [00:25:00] for these for these COVID crimes. Anyway, 70 months in prison for money laundering of nearly $2 million in fraudulent Covid 19 relief loans. After pleading guilty in October [00:25:10] 2023, Hermoso and her coconspirators filed false and fraudulent loan applications from multiple companies under both the PGP and Eidl programs, despite the [00:25:20] fact that several of those companies had no payroll at all and were not actively doing business at the time the loan applications were submitted, that.

[00:25:28] Greg Kyte: Was because that was the whole, if you remember [00:25:30] it, that was the driver for how much you were eligible for was based on full time employees and their wages, uh, which again, was why [00:25:40] mine were very small because we have very small staff. So when you've got two employees, you don't get a whole lot of money. And if you have zero employees, you get zero [00:25:50] money.

[00:25:50] Caleb Newquist: Yeah, right. The applications were supported by fabricated payroll documents and inflated employee numbers. As a result of these false and fraudulent applications, a California [00:26:00] based, SBA approved PGP lender dispersed close to $2 million in fraudulent loan proceeds to bank accounts controlled by Hermoso. Wow. So how did she spend [00:26:10] that money? I'll tell you how. She gambled at South Florida casinos and various other personal expenses like cosmetic surgery, a Cadillac Escalade, [00:26:20] and a Pomeranian puppy.

[00:26:23] Greg Kyte: Yeah. And again, you can see the Cadillac Escalade, but it loses so much value as soon as you drive it off the lot, you're [00:26:30] not getting your you're not getting your $2 million back. And you know what? You can't resell, uh, a boob job. That's you cannot that you can't you can't repo [00:26:40] that. That's just that's just there. Dateline Vermont in August 2023, Dana Elle [00:26:50] McIntyre was sentenced to two years in jail and three years of supervised release after he pleaded guilty to four counts of wire fraud and three [00:27:00] counts of money laundering. What did Dana Elle McIntyre do? Great question. He filed fraudulent PGP applications for more than $660,000. [00:27:10] He did have a legitimate business. It was a pizzeria. But instead of using his PGP proceeds for that, he [00:27:20] used his PGP proceeds, uh, to fund personal expenses, including $14,000 for a pickup truck. That's actually a pretty good price for a pickup [00:27:30] truck.

[00:27:30] Caleb Newquist: That's a good price on a pickup.

[00:27:31] Greg Kyte: And 8500 bucks for a 1950 Hudson. Mm. That's. That also seems like a really good price, but it's the pandemic. [00:27:40] Maybe he's picking these up cheap because people are, uh, pinched for funds because there's a global pandemic going on.

[00:27:46] Caleb Newquist: I can't picture a Hudson. What's it look like?

[00:27:48] Greg Kyte: Oh, that was, uh. Did you ever see [00:27:50] cars? Sure, doc. Doc, the the old the old grumpy one that he was, uh, the Hudson Hornet, so.

[00:27:57] Caleb Newquist: Voiced. Voiced by Paul Newman.

[00:27:59] Greg Kyte: There you go. Yeah. [00:28:00] So that.

[00:28:00] Caleb Newquist: Was right. Okay, now I can picture.

[00:28:02] Greg Kyte: But again, don't you think 8500 bucks. That seems like. I think it's a great.

[00:28:05] Caleb Newquist: Uh, that's that seems like a good price for a Hudson.

[00:28:07] Greg Kyte: I'd buy, I'd buy a Hudson for and just [00:28:10] try to resell it, I guess. I don't know, I probably wouldn't. Um, he also used some of the proceeds for home construction, kitchen remodeling, and more than $2,000 [00:28:20] at a cosmetic spa. Because I guess full Lips sell more deep dish pizzas. And get this, [00:28:30] he also spent some of that money on an alpaca farm. Uh. Yeah, just that's when you have too much money. [00:28:40] That's when you have too much fraud, fraudulently obtained money. It's like, what else could I do? Oh well I got well I already got all this cosmetic, uh, spa, uh, services. [00:28:50] So. And I got a 19 a car from the 1950s. I guess you gotta use pickup. My bucket list is all gone. Oh, wait. Alpaca farm. I always wanted, uh, a [00:29:00] farm full of miniature. What are the.

[00:29:04] Caleb Newquist: Have you ever encountered an alpaca? Wait, an.

[00:29:06] Greg Kyte: Alpaca is like a what is it.

[00:29:08] Caleb Newquist: Like a llama?

[00:29:08] Greg Kyte: Llama? That's what I'm trying to think. It's [00:29:10] like a little llama, isn't it?

[00:29:11] Caleb Newquist: Yeah, except they're big, like.

[00:29:13] Greg Kyte: Oh, they're big. Have you bigger than llamas?

[00:29:15] Caleb Newquist: I don't know if they're bigger than llamas, but they are. They're they're pack animals like they.

[00:29:19] Greg Kyte: Yeah [00:29:20] I know they're not like cats.

[00:29:22] Caleb Newquist: And I mean they're very sweet and they're very docile kind of animals, but they're, but they're big and and when they get mad, I think they spit. I think they do kind of. [00:29:30] Yeah.

[00:29:30] Greg Kyte: That's what I've heard about llamas at least, is that.

[00:29:32] Caleb Newquist: Yeah. Well llamas and.

[00:29:33] Greg Kyte: Camels. Yeah yeah yeah, yeah. If I learned anything from cartoons, it's that those types of animals spit. Yeah. So. [00:29:40] Well, I think it might be worthwhile to pause from our narrative of the story of, uh, Dana McIntyre [00:29:50] just to remind those of you who aren't suffering from PTSD, which is post Paycheck Protection Program Traumatic Stress disorder. [00:30:00] Um, the PGP program had very, very specific guidelines for what you could spend the proceeds of your PGP loan on [00:30:10] and what you even must spend the proceeds from your PGP loans on. And alpaca farms and Botox were nowhere on that [00:30:20] that list. So anyways, in this article surprising. Yeah. Shocker.

[00:30:26] Caleb Newquist: Shocker kind of.

[00:30:28] Greg Kyte: Anyway, an article in the New York [00:30:30] Times in August 2023 said McIntyre claimed that he had viewed the money as a loan that he would someday pay back, and since it was just a loan, he [00:30:40] thought he could spend it on whatever he wanted. Quote. It was a pandemic and I panicked, said Mr. McIntyre. Uh.

[00:30:48] Caleb Newquist: Well, I don't know why [00:30:50] I thought that quote was so funny. It's hilarious. I panicked.

[00:30:55] Greg Kyte: I panicked because, you know what people do in a panic.

[00:30:58] Caleb Newquist: So he they go get [00:31:00] Botox. That's what.

[00:31:00] Greg Kyte: They do. Yeah. And alpaca farms, that's what anyone does. That's that's the human panic response. Yes.

[00:31:06] Caleb Newquist: Uh, it's it's it's fight or uh, alpaca [00:31:10] flight.

[00:31:11] Greg Kyte: Right. Exactly. Fun fact Mr. McIntyre is also the host of a cryptocurrency radio show because nothing says I didn't [00:31:20] do anything wrong. Like being so into Bitcoin that you host a podcast about Bitcoin. Uh, the article goes on to explain that McIntyre, quote, [00:31:30] used the names of his adult children to apply for two loans for businesses that did not exist, including one named Dana's Dank Pies. [00:31:40] Now, Caleb, not to give too much away, but if your fake business name is Dana's Dank Pies, you for sure spent some [00:31:50] of your PGP money on weed. Like, absolutely for sure. Yeah, spent it on weed.

[00:31:56] Caleb Newquist: And I mean, you're. And you've got an alpaca farm in in Vermont, so like, it's [00:32:00] I mean, that was kind of a giveaway.

[00:32:02] Greg Kyte: Kind of lines up. Yeah. Yeah. It's kind of line up. Yeah, yeah. Uh, McIntyre also told the times reporter, uh, quote, it's just putting [00:32:10] some numbers and letters and pretty much whatever you want. Instead of putting seven employees, I put 47. That's my crime. That's the beginning of the crime, [00:32:20] and that's the end of the crime. Sounds like a stoned alpaca farmer.

[00:32:27] Caleb Newquist: That's what it sounds like to me. [00:32:30] Yeah, but.

[00:32:30] Greg Kyte: And every. Listen, Caleb, every quote from from this guy is a gem. Here's a, here's another one quote. It wasn't this mastermind program to steal money from the government [00:32:40] and go up and start this alpaca farm. No, it unfolded and took on its own life form.

[00:32:47] Caleb Newquist: Yeah, yeah, yeah, a lot [00:32:50] that some of those, some of those PGP proceeds went to some to some good edibles.

[00:32:55] Greg Kyte: It's like he's it's like he's saying, don't blame me. Blame the sentient [00:33:00] fraud that I birthed through Dana's dank pies.

[00:33:09] Caleb Newquist: A few final [00:33:10] notes. First, many of our listeners are accountants, and it would be remiss of us not to call out a couple of pending cases that we found, uh, that involve their [00:33:20] brethren. Okay. Yeah. One involves a new Jersey tax preparer, Leon Haynes of Teaneck, who is charged with five counts of aiding and [00:33:30] assisting in the preparation of false tax returns, five counts of mail fraud, one count of aggravated identity theft and two counts of tax evasion. Wow. This is related [00:33:40] to his allegedly filing of more than 1600 false tax returns for himself and his clients that claimed employee retention credits [00:33:50] worth $150 million.

[00:33:52] Greg Kyte: Holy crap.

[00:33:54] Caleb Newquist: Again, allegations. At this point, this case is pending, but.

[00:33:58] Caleb Newquist: Good lord. [00:34:00] Yeah.

[00:34:01] Caleb Newquist: Okay. Second, in June 2023, 14 people in Texas were charged in a $53 million scheme involving some affiliated [00:34:10] recycling companies that collectively applied for 29 PGP loans. The CFO, a couple of controllers, an array of other executives are facing a slew of charges, [00:34:20] including bank fraud, conspiracy to commit bank fraud, aiding and abetting, and conspiracy to commit money laundering. Okay.

[00:34:29] Greg Kyte: Which [00:34:30] is nice that they didn't they weren't charged with money laundering, just trying to commit money laundering.

[00:34:36] Caleb Newquist: Right.

[00:34:37] Greg Kyte: Just talking about.

[00:34:38] Caleb Newquist: Taking a stab at taking a [00:34:40] stab at money laundering.

[00:34:41] Greg Kyte: Chatting about the possibility of money laundering.

[00:34:46] Caleb Newquist: It is funny when you think about that. That's like what happened, right? Yeah. Like. Yeah. Allegedly. [00:34:50]

[00:34:51] Greg Kyte: Yeah. Right.

[00:34:52] Caleb Newquist: All right. Finally, finally a follow up from a previous pandemic aid fraud episode. As you well know, we've [00:35:00] done a few other pandemic aid episodes. Yeah. Episode 39 was on Idol Fraud, episode 35, excuse me. Episode 34 was [00:35:10] on PGP, and our OG PGP episode I believe was episode 13. So that is [00:35:20] a that's.

[00:35:20] Greg Kyte: That's digging deep.

[00:35:22] Caleb Newquist: It is deep cuts. Anyway, uh, this, uh, is from the idol episode, and you may remember Florida Congressman [00:35:30] Joe Harding again. This is episode 39 on the Idol Fraud. He's the guy who came up with Florida's Don't Say Gay bill that was signed into law in March 2022. Yeah, [00:35:40] a real, real delight. This guy. Yeah, yeah. Anyway, he, uh. Then as if you if if I summarize the story, he got into some trouble with some [00:35:50] idol fraud hijinks less than a month after he was sworn into the Florida legislature. Yeah. And as we told you on that episode, he pleaded guilty in March 2023 to wire fraud, money laundering [00:36:00] and making false statements. He was finally sentenced in October 20th 23 to 4 months in prison and two years of supervised release. All [00:36:10] right, Greg, did we learn anything?

[00:36:17] Greg Kyte: No. We learned nothing new from today's [00:36:20] show. Just. Just reminders of things that we learned from previous shows. I still like legit, though. Caleb. I'm. Yeah. I'm still. I [00:36:30] think it's so interesting. Uh, even, dare I say, fascinating. Just the the weird, like, uh, what is it like like the different the opposing [00:36:40] forces that any politician faces during a crisis, like, like the pandemic, where, where there's, there's people who need help [00:36:50] and they need it now. Now. Yeah. Um, but but also so. So the pressure is on to get these people the relief that they need right [00:37:00] now. But at the same time, we know very clearly. And it's not just from the pandemic, it's from other relief programs that have happened in the past is that whenever there's something [00:37:10] like that, yeah, it does get thrown out there very hastily, but because of the haste in which it's thrown out there, there's tons of opportunities for bad actors [00:37:20] to sweep in and to take advantage of the system. Now, uh, a lot of the people we're looking at did it really like they were idiots? Uh, [00:37:30] and like, of course you're going to get I mean, that was a that was I mean.

[00:37:34] Caleb Newquist: We appreciate them for it. Yeah.

[00:37:36] Greg Kyte: Oh, absolutely. But that but that's the thing I remember filling out my PGP [00:37:40] loans and it was and it was just one of those things where it's like, you gotta you gotta send in your 941 along with them to back up your what [00:37:50] you're claiming your FTS are. Yeah. But, uh, but at the same time. Yeah. Could you, could you fake a 940. Yeah. They're not sure but but but you [00:38:00] know, even then you go, well, I guess I'm sending this to the government and the government's got to have some sort of way of like cross checking my 941 against the one I sent in. But then you, you know, it's just [00:38:10] it's one of those things where if you have a massive amount of people who are all committing the same crime, not all, there's safety in numbers, not all of them are going to get going to get caught for sure. But [00:38:20] uh, but but the, the, you know, and I think that the right choice for politicians is to do it hastily. But uh, but again, you know, [00:38:30] that's, that's the cycle that we see is that there's a, there's a crisis, there's funds that are released to assist in the crisis. There are bad people who come in and snatch [00:38:40] those funds up, uh, in nefarious ways. And then we spend a lot of time feeling butthurt and blaming the the politicians who rolled it out too quickly [00:38:50] for gross negligence when really they were just that, you know, like I said, they were caught in this weird, these weird crosshairs of, you know, damned if you do, damned if you don't. For real. Did [00:39:00] you learn anything, Caleb?

[00:39:03] Caleb Newquist: Did I learn anything? No, I don't think I learned anything. I just think we we waste.

[00:39:07] Greg Kyte: Listener. We wasted your time today. This was [00:39:10] just. This was just pure. And this is.

[00:39:11] Caleb Newquist: Just. This is just us having a good time yakking about some more pandemic aid fraud, juicy stories. Yeah. You know, what's interesting is that, you know, they [00:39:20] have the statute of limitations, at least partially. I don't I don't know I don't know what the nuances are of like the extension of that statute of limitations. But [00:39:30] I mean, they're going to be prosecuting, they're going to be prosecuting people for several more years. And. They're not going to get everybody right? No, they're just not going [00:39:40] to. And like what you point out is that yeah, you've you've got to in order to get this money, you needed to like you needed to follow [00:39:50] the instructions. Yeah. And so many people got money without following instructions. I have to believe that the, the most likely people [00:40:00] who are going to end up getting away with it are the ones who follow the the instructions to the letter.

[00:40:07] Greg Kyte: Yeah, yeah, yeah.

[00:40:08] Caleb Newquist: And but did it fraudulently. [00:40:10] Right.

[00:40:11] Greg Kyte: You know what I mean. Or again you follow you follow it to the letter and then like again if you're I mean I think, I think the biggest thing like I said you got automatic [00:40:20] loan forgiveness and again I could be wrong. There's somebody somebody's going to correct me on this. But I swear it was under $150,000. You or you didn't even.

[00:40:27] Caleb Newquist: Have to apply for the.

[00:40:28] Greg Kyte: You didn't even have to apply for automatic [00:40:30] forgiveness. And so so with that, it's like, oh, there's tons of people who either were misinformed on how they, you know, kind of like the Dana McIntyre guy. I mean, if you take his word for [00:40:40] it, he just was like, I thought I was just getting money and I could spend it however I want. I thought just like a loan, like a credit card. Yeah, right. I'm paying it back so I can spend it however I want. If I got to pay it back, who cares? Yeah, [00:40:50] it's like, nope, that's not that's not how this works. So people under $150, I bet you that there's bazillions of people who spent that money completely incorrectly. [00:41:00] Who, uh, who who just are never going to face consequences because they weren't, because they got automatic forgiveness. So there's never going to be any scrutiny given to them. Yeah.

[00:41:09] Caleb Newquist: I [00:41:10] think the other thing that was interesting about these, I mean, I think the Broward County sheriff's story is extremely interesting because again, it's similar to it's [00:41:20] it's it's it's similar to, you know, the congressman in Florida who was just like, oh, you have people in, you know, in public service positions. Yeah. Who are [00:41:30] who were taking advantage or were taking advantage. Yeah. And I guess, you know, we should be grateful that they aren't getting a pass, you know. Yeah. And I mean, [00:41:40] I don't know like I mean it's those, those county, those those county sheriff employees like they, they put in one of the press releases, they put everybody in there [00:41:50] and you're just like, oh, it's clearly these are just regular people who were fucking around and they thought, oh, like, they just. So [00:42:00] let me ask you this. This is what brings up for me how many in like, the mcEntire guys. A good example too, is like, how many of these people just got bad information, like somebody they like, they had a conversation with somebody like, yeah, man, [00:42:10] I got 50 grand. I got 50 grand from this thing.

[00:42:13] Greg Kyte: I don't even have to pay it back. And they're like, what? You know.

[00:42:15] Caleb Newquist: Yeah. And like and then.

[00:42:16] Caleb Newquist: They fucking just.

[00:42:17] Caleb Newquist: Go and do it like, right. Like what percentage of these [00:42:20] cases are people that are just don't know what they're getting themselves into. Right. And they think it's just a free for.

[00:42:25] Greg Kyte: All right. I see and I that's, I don't know, I, [00:42:30] I mean the way you just talked about that sounds very much like TikTok tax advice where. Absolutely. Yeah. Get yourself a private jet and, [00:42:40] you know, write it off. I write it off because, you know, you could make your money if you, you know, whatever they, they claim. Yeah. Um, so I, I'd have to think that there is [00:42:50] a percentage of people who were just getting bad advice, but I still would not give them a pass, even ethically, [00:43:00] for doing that, because I think everybody understood the whole idea that money was to help struggling businesses stay in business, not [00:43:10] to fund your super yacht. Yeah. So I yeah.

[00:43:14] Caleb Newquist: So I or an alpaca.

[00:43:15] Greg Kyte: Farm or an alpaca farm. Exactly. And I don't want.

[00:43:18] Caleb Newquist: I don't I didn't want to suggest that I [00:43:20] think the people were were deserving of a, of a, of a, you know, get out of jail free. But like, it's just, it's just one of those things where [00:43:30] I mean, there's just, you know, like you say, you know, financially getting your financial advice from TikTok or maybe getting your, uh, government assistance advice from TikTok, [00:43:40] maybe don't do that. You know, like, yeah, that's that's, you know, that.

[00:43:44] Greg Kyte: Is a lesson that if you hadn't learned yet, I'm glad you learned it here at the end of episode, [00:43:50] whatever this is, uh, 61 one of oh my fraud. Because, uh, yeah, you should already know that. Okay, [00:44:00] that's it for this episode. And remember saying that you employ 47 people when you only employ seven people is not a rounding error. [00:44:10]

[00:44:10] Caleb Newquist: And also remember, a rose gold and diamond pendant with your company's logo might be a legitimate business expense for a rapper, but it is not a legitimate business expense [00:44:20] for someone pretending to be a tax preparer.

[00:44:22] Greg Kyte: If you want to drop us a line, send us an email at omai. Fraud at earmark cpcomm. Caleb, where can people find you out there [00:44:30] if they're wanting to reach you?

[00:44:32] Caleb Newquist: You can hit me up on LinkedIn. Caleb Newquist forward slash. Caleb Newquist that's where I'm at.

[00:44:38] Greg Kyte: Yeah.

[00:44:39] Caleb Newquist: Greg, [00:44:40] have you checked LinkedIn in the last year.

[00:44:42] Greg Kyte: I spent I spent some time on there today. Oh, uh, accepting, uh, connection requests and [00:44:50] replying to a couple of direct messages. So, yeah, I get on there. Not not all the time, but enough. So, uh. Yeah, feel free to to reach out to me through, uh, LinkedIn. [00:45:00] Uh, it's Greg Kyte, CPA is who I am. So I think it's forward slash Greg Kyte. And you'll find me on there.

[00:45:08] Caleb Newquist: All right. [00:45:10] Oh My fraud is written by Greg Kyte and myself. Our producer is Zach Frank. If you like the show, leave us a review or share with a friend. Rating the show and leaving reviews helps other people find the podcast. [00:45:20] Subscribe wherever you get podcasts. If you are an accountant and you want to get some CPE credit, listen on earmark to do that. [00:45:30]

[00:45:30] Greg Kyte: It's a great way to get it.

[00:45:32] Caleb Newquist: Join us next time for more swindlers and scams from stories that will make you say, oh, fraud!

[00:45:36] Greg Kyte: Fraud!