A Bergen County attorney was charged with three counts of bank fraud and one count of money laundering in connection to federal Paycheck Protection Program (PPP) loans.
The complaint argued Jae H. Choi, a Cliffside Park resident, fraudulently applied for three PPP loans to three different lenders. The requests for for different businesses that purportedly provided educational services.
The suit was filed by U.S. Attorney Craig Carpenito and Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.
Fraudulently Representing the Companies
The complaint alleges Choi falsely represented to the lenders the size of the businesses. In documentation, he argued each had hundreds of employees and paid over $3 million in monthly wages.
With the false information, Choi allegedly received loans for $3 million from each of the lenders, totaling nearly $9 million that could have been used for struggling businesses amid the coronavirus pandemic.
With the loans, Choi allegedly acquired a $1 million home in Cresskill and funded $30,000 worth of remodeling and improvements. He also funded a stock market account for his spouse.
Investigated by the IRS Criminal Division
The case was investigated by the Internal Revenue Service (IRS) Criminal Investigation unit, under the direction of Special Agent in Charge Michael Montanez.
The funds Choi is alleged to have stolen were part of a program passed in The Coronavirus Aid, Relief, and Economic Security (CARES) Act. The federal program It is designed to provide emergency financial assistance to Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.