August 4, 2023
Fraud Friday – PPP Lender Who Fraudulently Gained $71.3 Million in Fees Sentenced to 4.5 Years
U.S. Attorney Damian Williams says: “Martinez lied to get money that was supposed to help people through the challenges of COVID-19. He lied so that he could fund a lavish lifestyle of cars, jets, and fancy homes. Today’s sentence sends a clear message to those who would abuse the system to serve their own selfish ends: such conduct will be brought to light and to justice. No one’s greed is above the law.”
At the start of PPP, Rafael Martinez applied for a PPP loan for Republic Group, doing business as MBE. He said in the application that he had 15 employees and an average monthly payroll of almost $120,000. The truth was that he had at most four employees and a monthly payroll of no more than $25,000. In support, he submitted doctored tax records with the forged signature of a tax preparer. MBE Capital was approved for a $283,764 PPP loan.
Only five days later, Martinez managed to become a non-bank PPP lender through misrepresentations that MBE Capital originated and serviced over $3.8 billion in business loans or other commercial financial receivables. Along with this, he submitted fraudulent financial statements that purported to be audited by a tax preparer’s firm.
Martinez submitted the same fraudulent documents to a life insurance company for a proposed partnership to fund PPP loans for minority and women-owned businesses. The $100 million from the partnership with the life insurance company was instead used as collateral to borrow $832 million through the Paycheck Protection Program Liquidity Facility.
Though it was through fraudulent means, Martinez did issue $832 million in PPP loans and helped 36,600 small businesses. This earned him $71.3 million in undeserved fees which were then spent on:
- A $10 million villa in the Dominican Republic
- A $3.5 million mansion in New Jersey
- A chartered jet service
- A 2018 Porshe 911 Turbo
- A 2017 Ferrari 488 Spider
- A 2017 Bentley Continental GT
- A BMW 750
- A 1962 Mercedes Benz 190
Rafael Martinez was sentenced to 4.5 years for one count of conspiring to commit wire fraud. He will have to forfeit over $44.5 million, multiple properties, and all of his luxury vehicles. Further, he must pay more than $71.7 million in restitution.