Connecticut Couple Pays $169K to Resolve Allegations of Covid-Relief Loan Fraud
Leonard C Boyle, United States Attorney for the District of Connecticut, and David Sundberg, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that JANINE E. CARBONARO and GERARD CARBONARO, of Oxford, have paid $169,563.60 to resolve allegations that they fraudulently misspent $109,000 in small business loans and grant/advances under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.
The CARES Act was enacted to provide emergency assistance to individuals, families and businesses affected by the coronavirus pandemic. Section 1110 of the CARES Act authorized the U.S. Small Business Administration (“SBA”) to provide Economic Injury Disaster Loans (“EIDLs”) to help overcome the effects of the COVID-19 pandemic by providing working capital to eligible small businesses, including sole proprietors, to meet operating expenses. It also permitted eligible applicants seeking loans under the EIDL program to request and receive advance EIDL grants while their EIDL Loan applications were pending.
On April 7, 2020, Gerard Carbonaro applied for an EIDL Loan and Grant/Advance on behalf of Janine E. Carbonaro as sole proprietor for Hair Attraction Design Team, a hair salon located in Monroe, Connecticut. The loan documents required Janine E. Carbonaro to “use all the proceeds of this Loan solely as working capital to alleviate the economic injury” caused by COVID-19. The Carbonaros did not use the proceeds of the EIDL Loan and Grant/Advance as working capital for Hair Attraction Design Team. Instead, they used the proceeds to pay off the mortgage of a residential property in Florida, and to purchase an additional residential property in Florida for personal investment purposes.
As part of a civil settlement agreement with the government, in addition to repaying the EIDL Loan and Grant/Advance with interest and penalties, the Carbonaros also agreed to withdraw a pending application for a loan increase.
“The Justice Department and our federal investigative partners continue to uncover those who violated the terms of CARES Act business loan programs and misused the funds they received, and we are committed to pursuing civil or criminal penalties against wrongdoers,” said U.S. Attorney Boyle.
“These individuals, motivated by greed, chose to defraud programs intended to bring relief to those in need,” said FBI Special Agent in Charge Sundberg. “Justice has prevailed and we will continue to pursue every opportunity to combat COVID relief fraud in the State of Connecticut.”
This investigation was conducted by the Federal Bureau of Investigation. This matter was handled by Assistant U.S. Attorneys Sarah Gruber and Christopher W. Schmeisser, with the assistance of the SBA’s Office of General Counsel.
Individuals with information about allegations of attempted fraud involving COVID-19 are encouraged to 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.