Brooklyn Man Sentenced to 72 Months in Prison for $1.9 Million Paycheck Protection Program Fraud
Defendant Used Fraudulently Obtained Loan Funds for Personal Expenses and Purchases of a $100,000 Cadillac Escalade and $250,000 Bentley Continental
Earlier today, in federal court in Brooklyn, Leon Miles was sentenced by United States District Judge Brian M. Cogan to 72 months in prison following his guilty plea to making false statements in an application for over $1.9 million from the Paycheck Protection Program (PPP), which Congress created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The court also ordered forfeiture in the amount of $1,904,593, including the 2020 Bentley that the government seized, and restitution in the amount of $598,299.39 to the authorized lender.
Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Amaleka McCall-Brathwaite, Special Agent-in-Charge, Office of the Inspector General of the U.S. Small Business Administration, Eastern Region Office (SBA-OIG); and Thomas M. Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the sentence.
“Leon Miles selfishly enriched himself by defrauding a program designed to alleviate the economic suffering caused by the COVID-19 pandemic,” stated United States Attorney Peace. “The defendant stole nearly $2 million dollars that was intended to keep struggling businesses afloat and honest workers employed, and he spent those funds on personal luxuries. This Office and our agency partners will continue working to bring to justice those fraudsters who try to take advantage of a national emergency, and recover every dollar that they stole from the government.”
“Leon Miles indulged himself at the expense of U.S. taxpayers by both defrauding the Paycheck Protection Program and victimizing those business owners who legitimately needed the benefits. Today’s sentencing is a fair response to Miles’s criminal behavior and he will now face justice behind bars,” stated IRS-CI Special Agent-in-Charge Fattorusso.
“OIG works tirelessly to identify persons seeking to use falsified information to selfishly exploit SBA programs meant to uplift the nation’s small businesses,” said SBA OIG Eastern Region Special Agent in Charge McCall-Brathwaite. “Our Office will remain relentless in the pursuit of fraudsters who seek to exploit SBA’s vital economic programs. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and commitment to seeing justice served.”
The CARES Act is a federal law enacted on March 29, 2020 to provide emergency financial assistance in connection with economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP. The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities. The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.
In May 2020, Miles applied for a $1,904,593.00 PPP loan on behalf of a limited liability company he owns in Brooklyn, falsely claiming that the company had 50 employees and a total average monthly payroll of $761,838.00. In support of these claims, Miles submitted fraudulent personal and business tax returns and tax forms that were never filed with the IRS. In fact, he reported to the IRS no taxable income during the relevant period, and his company filed no tax returns and reported no wages paid to employees. The loan proceeds were disbursed to Miles’s personal savings account, and within days he had withdrawn hundreds of thousands of dollars, a portion of which he used to purchase a 2020 Bentley Continental for approximately $250,000 and a 2020 Cadillac Escalade for approximately $100,000. The government seized the 2020 Bentley Continental, and the insurance proceeds of the 2020 Cadillac Escalade, which had been totaled. Additionally, approximately $1.3 million of the loan proceeds were frozen and returned to the authorized lender.
The government’s case is being prosecuted by Assistant United States Attorney Robert M. Pollack. Assistant United States Attorney Brian D. Morris of the Office’s Asset Recovery Section is handling forfeiture matters.
Brooklyn, New York
E.D.N.Y. Docket No.: 21-CR-221 (BMC)