Hubert Ivan Ugarte, Covid-Relief Fraud, Utah 2020

Utah Man Charged with Covid-Relief Fraud

A federal complaint unsealed last week charges the owner of a Utah trucking company with submitting a fraudulent loan application to get a Paycheck Protection Program (PPP) loan of $210,000 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Hubert Ivan Ugarte, 52, of Draper, with the assistance of Lisa Bradshaw Rowberry, 49, of Provo, Utah, submitted a loan application to the Small Business Administration (SBA) to obtain the PPP loan, according to the complaint.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to millions of Americans suffering from the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $249 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized more than $300 billion in additional PPP funding.

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 by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be entirely forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses a certain amount of the PPP loan proceeds on payroll expenses.

According to the complaint, Ugarte, with Rowberry’s assistance, answered “no” to questions on the application asking whether he was under formal criminal charges in any jurisdiction. His answer was false because he was under federal indictment in Utah when he answered the question, the complaint alleges. Ugarte faces four counts of wire fraud and six counts of money laundering in the pending case.

The conspiracy and removal of property to prevent seizure counts each carry a potential sentence of up to 20 years in prison, three years of supervised release, and a fine of up to $250,000. Loan application fraud carries a potential sentence of up to 30 years in prison, three years of supervised release, and a fine of up to $1 million. Wire fraud carries a potential sentence of up to 20 years in prison, three years of supervised release, and a fine of up to $250,000. Money laundering carries a potential sentence of up to 20 years in prison, three years of supervised release, and a fine of up to $500,000.

Ugarte and Rowberry are charged with conspiracy, removal of property to prevent seizure, loan application fraud, wire fraud, and money laundering in the complaint. The original PPP loan application was rejected or declined by two banks after they had discovered Ugarte was under federal indictment. Ugarte received $210,000 from Transportation Alliance Bank on May 14, 2020. Instead of using at least 75 percent of the loan to pay payroll costs, Ugarte’s business account shows an automatic withdrawal to Kenworth Sales in the amount of $126,965.27 just four days after the loan was received.

Ugarte’s business account shows an automatic withdrawal to Kenworth Sales in the amount of $126,965.27 just four days after the loan was received. Ugarte used 60 percent of the loan to pay the past due truck payments – leaving 40 percent for payroll costs. Ugarte and Rowberry are being held without bail until their next court appearance. The case is being prosecuted by Assistant U.S. Attorney, [name] of the U.S. Attorney’s Office for the District of Utah, and the FBI. SALT LAKE CITY – A federal complaint unsealed last week charges the owner of a Utah trucking company with submitting a fraudulent loan application to get a Paycheck Protection Program (PPP) loan of $210,000 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Ugarte, with Rowberry’s assistance, answered “no” to questions on the application asking whether he was under formal criminal charges in any jurisdiction.

Source: https://www.justice.gov/usao-ut/pr/two-utahns-charged-covid-relief-fraud-after-failing-disclose-applicant-was-under-federal