Orlando, Fla. – U.S. District Judge Anne C. Conway today sentenced Johnson W. Eustache to five years in federal prison for wire fraud and aiding and abetting in the preparation of false tax returns. The court also ordered Eustache to forfeit approximately $700,000 seized from multiple bank accounts, as well as real estate in Palm Bay and Poinciana, which are attributable to the proceeds of the offense.
Eustache had pleaded guilty on August 3, 2021.
According to court documents, from March 2020 through April 2021, Eustache submitted 13 different fraudulent claims seeking a total of more than $2.1 million in pandemic-related emergency benefits. The fraudulent claims consisted of Economic Disaster Loan (EIDL) or Paycheck Protection Program (PPP) applications with the U.S. Small Business Administration (SBA) and PPP loan servicers and lenders . Eustache submitted some of these requests in his own name and others in the name of associates or involuntary relatives. Eustache included false statements in each of the applications regarding the applicant’s criminal history, number of employees and/or total payroll.
Eustach’s materially false, fraudulent and misleading representations caused SBA and PPP lenders to approve and fund four PPP loans and four EIDL loans, totaling $1,343,029.50. Eustache did not use these funds for payroll or other eligible business expenses, as promised in loan applications. He instead used the funds to make personal financial investments, purchase real estate, and build residential properties.
Additionally, between 2017 and 2021, Eustache worked as a tax preparer, during which time he produced 28 returns for taxpayers; these statements contained false adjustments, false income amounts or false deductions. Eustache fraudulently included these false elements to inflate the amount of refunds to taxpayers. The fake items included fake business Schedule C losses, fake Schedule 1 adjustments to income deductions, fake household employee earnings, and fake W-2 wages. The total loss to the IRS as a result of the false tax returns filed by Eustache was $87,044.
The CARES Act (Coronavirus Aid, Relief, and Economic Security) is a federal law enacted in March 2020. It is designed to provide emergency financial assistance to millions of Americans who are suffering from the economic effects resulting from the COVID pandemic. -19. One of the sources of relief provided by the CARES Act is the authorization of up to $349 billion in small business forgivable loans for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows small businesses and other eligible organizations to receive loans with a term of two years and an interest rate of 1%. Businesses must use PPP loan proceeds for payroll costs, mortgage interest, rent and utilities. The PPP allows interest and principal to be waived if the company spends the proceeds of these expenses within a specified time and uses at least a certain percentage of the loan for payroll expenses.
The EIDL program is designed to provide economic relief to small businesses currently experiencing a temporary loss of revenue. Proceeds from EIDL can be used to cover a wide range of working capital and normal operating expenses, such as continued health care benefits, rent, utilities and fixed debt payments. If an applicant also obtains a loan under the PPP, EIDL funds cannot be used for the same purposes as PPP funds.
“Eustache not only fraudulently filed tax returns on behalf of his clients through his tax preparation business, but he also stole the money from a vital PPP loan intended to support struggling businesses. during the COVID 19 pandemic,” said IRS Criminal Investigations Special Agent Brian. Payne. “This sentence shows that stopping PPP cheats and unscrupulous tax preparers is a top priority for IRS-CI. With the onset of tax season, taxpayers looking to avoid sleazy preparers and find tips on how to select a tax preparer are encouraged to visit IRS.gov.
“This case demonstrates the quick and decisive action taken by the FBI and its federal partners to protect the Payment Protection Program,” said FBI Tampa Special Agent in Charge Michael McPherson. “We are taking huge investigative steps to ensure fraudsters are not taking advantage of the pandemic.”
“Fraudulent use of any SBA program undermines the spirit and true intent of strengthening the backbone of the national economy – small businesses,” said Amaleka McCall-Brathwaite, Special Agent in Charge of the region. East of SBA OIG. “Our office will remain relentless in pursuing fraudsters who seek to exploit the 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 ensuring justice is served. This matter was investigated by the Internal Revenue Service, the Federal Bureau of Investigation and the Office of Inspector General of the Small Business Administration. He was prosecuted by Assistant United States Attorneys Chauncey A. Bratt and Amanda Daniels. The forfeiture and restitution were handled by Assistant United States Attorneys Nicole Andrejko and Julie Simonsen.
Anyone with information about alleged attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) hotline at 866-720-5721 or through the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.