Owner Of Non-Existent Healthcare Companies Gets Prison Sentence For COVID Relief Fraud
Two years into the COVID-19 pandemic, the prevailing sentiment is that business owners, along with everyone else, will just have to find a way to live with the not-so-novel coronavirus. In Florida, which has been especially hard hit by several waves of COVID infections, people are starting to see COVID as just another invasive new neighbor to get used to much like the nutria, the Nile monitor lizard, the melaleuca tree, and the ubiquitous iguanas. In the early days of the pandemic, though, the federal government offered several loan and grant programs to small businesses to help get them through what everyone hoped would be a temporary hardship. AS of 2022, the Paycheck Protection Program (PPP) is a thing of the past, but the legal fallout for people who fraudulently applied for PPP loan funding continues. Here, our Miami PPP fraud defense lawyer explains how a Southwest Florida man got into legal trouble after making false statements on PPP loan applications.
The Charges: Wire Fraud
Sometime before the COVID-19 pandemic, Louis Thornton III of St. Petersburg operated several healthcare management companies, but all of them had gone out of business by the beginning of 2020. During the pandemic, he applied for funding for these companies through COVID-19 relief programs. In April 2020, Thornton applied for Economic Injury Disaster Loans (EIDL) in the name of Florida Health Management Systems and Harpeth Holdings, LLC. Even though both companies were defunct, he wrote on the loan applications that the companies were operational and that they had employees on their payroll. In May 2020, when the paycheck Protection Program debuted, he also applied for PPP loans for both companies. In June, he submitted an EIDL application and a PPP loan application for Florida Health & Rehab, Inc., another defunct company he had once operated. He also stated on the loan applications that this company was operational.
In total, Thornton requested approximately $1.9 million in COVID relief funding, and he received $814,632.50. He invested the money he received in stocks, commodities, and futures.
The Sentence: 42 Months in Federal Prison, Plus Probation and a Money Judgment
Neither news outlets nor the Department of Justice press release indicated how authorities discovered that the statements on Thornton’s loan applications were false, but Thornton, 63, pleaded guilty to charges of wire fraud in September 2021. The maximum sentence he could have faced was 20 years in federal prison.
In January 2022, a judge sentenced Thornton to three years and six months in federal prison. The judge ordered him to serve his sentence at the Pensacola Federal Correctional Institution, where he must undergo mental health counseling if it is available. He must also pay back the $814,632.50 he received from the PPP and EIDL programs. When he finishes his prison sentence, he must complete five years of probation.
Florida’s PPP Loan Fraud Problem
As PPP fraud cases go, Thornton’s story is quite tame. Other defendants in Florida have obtained bigger loans, spent the money more extravagantly, and told more outrageous lies on their loan applications. These are some other famous PPP fraud cases from Florida:
- A group of Broward County defendants operated a kickback scheme in which more than 90 small businesses applied for COVID relief funding and shared the proceeds. They obtained $17 million in total.
- Casey Crowthers of Fort Myers obtained a $2 million PPP loan for the roofing company he had inherited from his father and grandfather. He spent about a third of the money on a boat before being arrested on his 35th He pleaded not guilty, arguing that the boat was a business asset.
- Diamond Blue Smith, a recording artist known by the stage name Baby Blue, obtained PPP loans, valued at a total of more than $1 million, for two businesses he owns. One of the purchases he made with the money was a Ferrari.
- David Hines of Miami obtained $3.9 million in PPP funding. He spent about 10 percent of the money on a Lamborghini, which he promptly wrecked.
- Joshua Bellamy, formerly of the New York Jets, received more than $1.2 million in PPP funds. He spent more than $60,000 at the Seminole Hard Rock Hotel and Casino in addition to buying luxury clothing and jewelry.
Contact Our Financial Crimes Defense Attorneys
A South Florida criminal defense lawyer if you are facing criminal charges for PPP loan fraud or any other criminal offense that involves making false statements on official documents. Contact Ratzan & Faccidomo in Miami for a free, confidential consultation about your case.
Sources:
businessobserverfl.com/article/area-resident-gets-federal-prison-for-dollar800k-covid-19-relief-fraud
yahoo.com/lifestyle/st-pete-man-fraudulently-obtained-225053646.html
justice.gov/usao-mdfl/pr/st-petersburg-man-sentenced-more-three-years-prison-covid-19-program-fraud
