Fraud Friday – PPP Lender CEO Allegedly Purchased Luxury Cars and Homes with Fraudulent Lender Fees and PPP Loan
March 4, 2022
Delaney Sexton
Contributing Editor
Fraud Friday – PPP Lender CEO Allegedly Purchased Luxury Cars and Homes with Fraudulent Lender Fees and PPP Loan
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“American businesses and their employees have been struggling due to an unprecedented global pandemic, and the Paycheck Protection Program was created to serve as a safety net. Martinez is alleged to have fraudulently obtained funds through this program as both a recipient and a lender, and in effect, stole funds from his fellow Americans so he could purchase a New Jersey mansion, a villa abroad, and several luxury vehicles,” says IRS-CI Special Agent-in-Charge Thomas Fattorusso.
The CEO and primary owner of MBE Capital Partners, Rafael Martinez, applied for a PPP loan for his company in April 2020. Martinez allegedly claimed that MBE had as many as 15 employees and an average monthly payroll of just over $119,000. He obtained almost $284,000 using doctored tax records including the forged signature of a tax preparer in Manhattan, New York. The Complaint claimed that his company had at most 4 employees and a monthly payroll of no more than $25,000.
Within five days of applying for a PPP loan, it is alleged that he submitted an application to the SBA that would allow MBE Capital Partners to become a non-bank PPP lender. Rafael is accused of crafting fraudulent financial statements that would support his claim of originating and servicing over $3.8 billion in business loans or commercial financial receivables from 2017 to 2019. MBE was later approved as a non-bank lender for the Paycheck Protection Program.
Allegedly, Martinez submitted the same fraudulent financial statements to a life insurance company in an attempt to form a partnership with the company and fund PPP loans for minority and women-owned small businesses. About two weeks later, Rafael received $100 million from the life insurance company. Rafael borrowed $832 million from the Payment Protection Program Liquidity Facility and used the life insurance company’s money as collateral.
His status as a PPP lender allowed him to issue $823 million in PPP loans to 36,600 small businesses, and in return, Martinez made $71.3 million in lender fees.
With the alleged fraudulent PPP loan and lender fees, he purchased a more than $10 million villa in the Dominican Republic, a $3.5 million mansion in New Jersey, a chartered jet service, a 2018 Porsche 911 Turbo, a 2017 Ferrari 488 Spider, a 2017 Bentley Continental GT, a BMW 750, and a 1962 Mercedes Benz 190.
The Department of Justice is charging Rafael Martinez with one count of bank fraud, two counts of wire fraud, one count of making false statements to a bank, one count of making false statements to the SBA, and one count of aggravated identity theft.
Source:
DOJ Press Release