“As public employees, these folks should have known better. This Office will continue to prosecute those who use fraud to line their pockets with taxpayer money,” said US Attorney for the Southern District of New York, Damian Williams.
Seventeen New York City municipal workers, including seven from the NYPD, were busted in separate COVID-19 relief schemes that raked in over $1.5 million in federal funds.
The schemes involved taking advantage of the US Small Business Administration’s Economic Injury Disaster Loan program, a temporary measure put in place to help struggling businesses, but was often abused, the New York Post reports.
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View on RumbleRodney Smith, the supposed ringleader of the largest of the schemes, is accused of conspiring to file fraudulent applications through the SBA's relief program in 2020, many claiming to be from hair and nail salons, but all claiming similar numbers of employees and revenues. The eight applicants charged with being involved in this scheme, including five employees of the NYPD, netted between $52,000 and $60,000 each.
Overall, Smith was allegedly involved in 95 fraudulent applications, all of which were linked to him through the IP address of his Brooklyn home.
He now faces charges of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft.
In a separate scheme, ten others city employees were charged, including two NYPD employees, after allegedly applying to the Economic Injury Disaster Loan and the federal Payment Protection Program, where they inflated revenues for existing businesses and declared non-existent businesses.
Thomas Fattorusso, the IRS Criminal Investigations Special Agent in charge of the cases hopes these arrests send "a clear message."
"Nobody is above the law and while the pandemic has receded from the headlines, IRS-CI’s commitment to bringing those who defrauded these programs to justice remains unwavering," he said in a statement.
Damian Williams, US Attorney for the Southern District of New York, described the schemes as "offensive."
"Scheming to steal Government funds intended to help small businesses weather a national emergency is offensive," he said in a statement, "and, as public employees, these folks should have known better. This Office will continue to prosecute those who use fraud to line their pockets with taxpayer money."
The charges that the city employees will be facing each carry a maximum sentence of 20 years.
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