Former Warren County businessman admits fraudulently obtaining $1.8 million in COVID-19 small business loans | USAO-NJ
NEWARK, NJ – A Warren County, New Jersey businessman admitted today that he fraudulently obtained nearly $1.8 million in loans from the federal Paycheck Protection Program (PPP), U.S. Attorney Philip R. Sellinger and Deputy Attorney General Kenneth A. Polite Jr. of the Justice Department. Division announced.
Rocco A. Malanga, 50, formerly of Hackettstown, New Jersey, pleaded guilty by videoconference before U.S. District Judge Julien X. Neals to an information charging him with one count of bank fraud and one count of money laundering silver.
According to documents filed in the case and statements made in court:
From April 2020 to August 2020, Malanga submitted false documents to three lenders to fraudulently obtain approximately $1.8 million in federal COVID-19 emergency relief funds for struggling small businesses. He submitted at least three PPP loan applications on behalf of three different business entities in which he fabricated the number of employees employed by each business entity, as well as their average monthly payroll. Malanga then diverted some of the loan proceeds to fund a company that did not receive PPP loan funds.
The CARES Act (Coronavirus Aid, Relief, and Economic Security) is a federal law designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One of the sources of relief provided by the CARES Act was 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 allowed small businesses and other eligible organizations to receive loans with a term of two years and an interest rate of 1%. Businesses must have used PPP loan proceeds for payroll costs, mortgage interest, rent and utilities. The PPP allowed interest and principal to be waived if companies spent the proceeds of these expenses within a set time frame and used at least a certain percentage of the loan for payroll expenses.
The bank fraud charge carries a maximum sentence of 30 years in prison and a $1 million fine; the money laundering charge carries a maximum sentence of 10 years and a fine of $250,000. Sentencing is scheduled for November 2, 2022.
U.S. Attorney Sellinger and Assistant Attorney General Polite credited IRS Special Agents – Criminal Investigation, under Acting Special Agent in Charge Tammy L. Tomlins; postal inspectors from the US Postal Inspection Service in Newark, under Inspector-in-Charge Damon Wood; Special Agents of the Office of Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, under Acting Special Agent in Charge Stephen Donnelly; Federal Deposit Insurance Corporation Special Agents, Office of Inspector General, under Special Agent in Charge Patricia Tarasca, New York Region; and special agents from the Social Security Administration, Office of Inspector General, under the direction of Special Agent in Charge Sharon MacDermott, the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Blake Coppotelli from the District of New Jersey and Attorney Della Sentilles from the Justice Department’s Fraud Section.