Leader Of Miami Crew Sentenced To 63 Months In Prison For Defrauding Banks And Cryptocurrency Exchange Of More Than $4 Million
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MARCUS FRAZIER pled guilty to carrying out a fraudulent scheme to obtain $6.9 million in government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic. FRAZIER pled guilty before United States District Judge Alison Nathan, to whom his case is assigned.
U.S. Attorney Damian Williams said: “Marcus Frazier sought millions of dollars in unsecured SBA-guaranteed loans for which his businesses did not qualify. He lied about the number of people employed by his businesses, the salaries they were paid, even that these employees existed. Further, Frazier used the loan proceeds he obtained to fund his lavish lifestyle, not to pay permissible expenses. Now Marcus Frazier awaits sentencing for his admitted crimes.”
According to the allegations in the Complaint, court filings, and statements made during plea proceedings:
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other business expenses through the Paycheck Protection Program (the “PPP”). The PPP allows qualifying small businesses and other organizations to receive unsecured loans guaranteed by the U.S. Small Business Administration (the “SBA”). PPP loan proceeds must be used by businesses for payroll costs, mortgage interest, rent, and/or utilities, among other specified expenses. Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and its average payroll costs. Businesses applying for a PPP loan must provide documentation to confirm that they have in the past paid employees the compensation represented in the loan application.
Between in or about May 2020 and in or about April 2021, FRAZIER submitted to the SBA at least seven applications for PPP loans for various businesses that he controlled (collectively, the “Frazier Companies”). These applications relied upon fraudulent statements regarding the number of employees of each business and the amount of payroll involved in each business, and were submitted, in many cases, alongside fake bank statements, designed to support FRAZIER’s false statements. These fake bank statements included, among other things, fraudulent account statements for a checking account that showed balances far greater than the account actually held, and that depicted payroll withdrawals that never occurred. FRAZIER also submitted lists of employees on the purported payrolls of the Frazier Companies, which included names and Social Security numbers which do not match the records of the Social Security Administration, suggesting that FRAZIER fabricated the employee records. On at least one occasion, FRAZIER also provided documents purporting to show that one of the Frazier Companies had been in existence for approximately 10 years. In fact, the corporate entity had not been registered until in or about July 2020, months after the onset of the COVID-19 pandemic.
FRAZIER sought a total of more than approximately $6.9 million in PPP loans and was awarded at least approximately $2.17 million. A substantial portion of the funds awarded was spent not on payroll for the Frazier Companies but, rather, on FRAZIER’s personal expenses. During the period between on or about June 18, 2020, shortly after his first PPP loan was funded, and on or about April 7, 2021, FRAZIER utilized PPP funds to spend approximately $124,982 on hotels, including more than approximately $88,791 at a luxury hotel located in Miami, Florida. During the same period, FRAZIER spent approximately $63,000 on restaurants and food service, approximately $17,000 on transportation using the ride-hailing app Uber, approximately $16,519 on airline travel, and approximately $11,000 on clothing. During this same period, FRAZIER collected approximately $21,000 in unemployment benefits.
In addition, between in or about January 2018 and in or about November 2019, FRAZIER engaged in a scheme to obtain personal loans from financial institutions and to evade the payment of credit card debt by making false representations, and sending fake documents, to lenders and banks.
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FRAZIER, 48, of New York, New York York, pled guilty to two counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1343, each of which carries a maximum sentence of 30 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
FRAZIER is scheduled to be sentenced by Judge Nathan on March 1, 2022, at 3:00 p.m.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, the SBA Office of the Inspector General, the Internal Revenue Service, and the Federal Deposit Insurance Corporation Office of the Inspector General.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Katherine Reilly is in charge of the prosecution.