Man Pleads Guilty to Fraudulently Obtaining Approximately $9 Million in COVID-Relief Loans, Some of Which Was Gambled Away
A California man pleaded guilty today to federal charges stemming from a scheme that used a series of corporations he controlled to fraudulently obtain approximately $9 million in loans from COVID-relief programs, some of which he used on gambling excursions to Las Vegas and transferred to his stock trading accounts.
According to court documents, Andrew Marnell, 41, of Los Angeles, admitted that he fraudulently obtained Payroll Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In the course of the scheme, Marnell obtained seven PPP loans totaling just under $9 million from financial institutions for corporations he controlled.
To obtain the loans, Marnell submitted fraudulent loan applications that made numerous false and misleading statements about the companies’ business operations and payroll expenses. Marnell, often using aliases, further submitted fake and altered documents, including bogus federal tax filings and employee payroll records. Once the loans were funded, Marnell transferred millions of dollars from the fraudulently obtained loan proceeds to his brokerage accounts to make risky stock market bets. Marnell also spent hundreds of thousands of dollars in fraudulently obtained loan proceeds at various gambling establishments.
The PPP program was implemented by the CARES Act, which was signed into law in March 2020 and was designed to provide relief to businesses affected by the coronavirus pandemic. The CARES Act also provided funding to the Economic Injury Disaster Loan Program (EIDL) administered by the SBA. Marnell admitted that he fraudulently obtained $170,000 in EIDL loans.
Marnell pleaded guilty to one count of bank fraud, which carries a 30-year statutory maximum penalty, and one count of engaging in a monetary transaction involving criminal proceeds, which carries a 10-year statutory maximum penalty. He is scheduled to be sentenced on Feb. 14, 2022. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
As part of his plea agreement, Marnell agreed to forfeit items related to the pilfered PPP loan funds, including more than $1.54 million seized from several brokerage accounts, $319,298 in cash recovered from his residence, numerous electronic devices, a Rolex Oyster watch, a Range Rover and a Ducati motorcycle.
The Federal Housing Finance Agency’s Office of Inspector General, the FBI, the Federal Deposit Insurance Corporation’s Office of Inspector General, IRS-Criminal Investigation, the Treasury Inspector General for Tax Administration, and the Small Business Administration’s Office of Inspector General investigated this case. The California Department of Justice’s Bureau of Gambling Control provided valuable assistance.
Trial Attorney Scott Armstrong of the Justice Department’s Fraud Section and Assistant U.S. Attorney Kerry Quinn of the Central District of California are prosecuting the case.
In May, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit: https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.