Gregory J. Blotnick, PPP Loan Scam, New Jersey 2023

New Jersey Man Sentenced for PPP Loan Scam

Newark, N.J. – In a shocking turn of events, a New York and Florida resident has been sentenced to 51 months in prison for his role in a scheme to fraudulently obtain federal Paycheck Protection Program (PPP) loans totaling over $6.8 million. Gregory J. Blotnick, 35, of Florida, pleaded guilty to one count of wire fraud and one count of money laundering.

According to documents filed in this case and statements made in court, Blotnick submitted 21 fraudulent PPP loan applications to 13 lenders on behalf of nine purported businesses that he controlled. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted on March 29, 2020, was designed to provide emergency financial assistance to Americans suffering the economic effects of the COVID-19 pandemic.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.

On Blotnick’s fraudulent PPP applications, which sought a total of approximately $6.8 million in total loans, Blotnick falsified various information to the lenders including the number of employees, the federal tax returns for his purported businesses, and payroll documentation. Blotnick obtained approximately $4.6 million in PPP funds and then misused the loan proceeds, including by transferring the funds to brokerage accounts from which he placed more than approximately $3 million in losing stock trades.

In addition to the prison term, Judge Brian R. Martinotti sentenced Blotnick to two years of supervised release and ordered him to pay restitution of $4,577,631. U.S. Attorney Philip R. Sellinger credited special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak, and other agencies with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Fatime Meka Cano of the U.S. Attorney’s Office Government Fraud Unit in Newark and Trial Attorney Cory E. Jacobs of the Criminal Division, Market Integrity and Major Frauds Unit.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.

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