March 4, 2022
Fraud Friday – PPP Lender CEO Allegedly Purchased Luxury Cars and Homes with Fraudulent Lender Fees and PPP Loan
“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.
DOJ Press Release