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Law360 (October 6, 2020, 10:59 p.m. EDT) – Federal authorities on Tuesday announced criminal charges against a star of the VH1 series “Love & Hip Hop: Miami” and an owner of a Pennsylvania towing company for having allegedly participated in a fraud ring that sought to secure more than $ 24 million in repayable COVID-19 relief loans through the Paycheck Protection Program.
Diamond Blue Smith, 36, a member of hip-hop group Pretty Ricky who uses the stage name Baby Blue Whoaaaa, and Tonye C. Johnson, 28, of Flourtown, Pa., Have been charged with wire fraud, bank fraud and conspiracy to commit wire fraud and bank fraud in unsealed complaints Tuesday in the Southern District of Florida, according to the US Department of Justice.
Smith was arrested and appeared on Monday before U.S. District Judge Regina D. Cannon of the Northern District of Georgia, while Johnson was arrested Thursday and appeared before U.S. District Judge Henry S. Perkin of the Eastern District on Friday. of Pennsylvania, the Justice Department said.
Smith, who lives in Miramar, Florida, allegedly used forged documents to secure PPP loans of $ 426,717 for his company Throwbackjersey.com LLC and $ 708,065 for his other company, Blue Star Records LLC.
Authorities said they seized a Ferrari they claimed to have bought for $ 96,000 along with other luxury items using the proceeds of a PPP loan. They also allege that he withdrew $ 271,805 from the loan proceeds and applied for PPP loans on behalf of others in exchange for bribes.
Johnson allegedly secured a $ 389,627 PPP loan for his company, Synergy Towing & Transportation LLC, using forged documents. Prosecutors said he paid part of that loan to the co-conspirators.
Prosecutors said the charges against Smith and Johnson stemmed from a scheme allegedly launched by Philip J. Augustin, 51, of Coral Springs, Fla., Who was accused of obtaining a fraudulent PPP loan from ‘roughly $ 85,000 in May for his talent management firm, Clear Vision Music Group, then recruiting numerous co-conspirators and filing dozens of bogus claims for millions of dollars in PPP loans.
In total, prosecutors said the group had applied for loans totaling more than $ 24 million, using fake bank statements and other forged documents to back up claims filed with banks across the country. country. Lenders then approved nearly four dozen of those requests and paid at least $ 17.4 million, according to federal officials.
Augustin and 10 other defendants have already been billed. Among them, NFL player Josh Bellamy, 31, who was stopped last month in Florida. He has been charged with obtaining over $ 1.2 million for his Miami-based company Drip Entertainment LLC and also seeking additional fraudulent PPP loans on behalf of others.
In dollar terms, the purported program is among the largest alleged to date by federal prosecutors investigating fraud under the loan program, which was launched in April as part of the federal government’s efforts to curb debt. economic damage caused by the coronavirus pandemic.
Congress authorized $ 349 billion in repayable PPP loans for small businesses under the Coronavirus Aid, Relief and Economic Security Act passed on March 29 and then authorized additional PPP funding of 300 billions of dollars.
The program allows small businesses to take out federally guaranteed loans of up to $ 10 million each for salary and overhead expenses, but its relatively lax eligibility requirements for borrowers and its offer of Total loan cancellation made the program an attractive target for fraud.
Smith and Johnson could not be reached for comment on Tuesday.
The government is represented by Philip Trout of the Fraud Section of the United States Department of Justice, and Aimee Jimenez and David Snider of the United States Attorney’s Office for the Southern District of Florida.
Information on Smith and Johnson’s lawyer was not immediately available.
Johnson’s business is USA v. Smith, Case Number 1: 20-mj-03723, and USA v. Johnson, Case Number 0: 20-mj-6450, in the United States District Court for the Southern District of Florida.
–Additional report by Jon Hill. Edited by Aaron Pelc.
Update: This story has been updated to include additional information about the case.
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