California rehabilitation center owner Jeffrey Schwartz and his company JMG Investments Inc. have been convicted of PPP loan fraud, ordered to pay $1,565,294.38 in damages and penalties.
The United States District Court for the Central District of California granted summary judgment to the United States against JMG Investments Inc., a California corporation, and its owner Jeffrey Schwartz, on Jan. 15, finding that they violated the False Claims Act when they knowingly received and retained more than one Paycheck Protection Program (PPP) loan prior to Dec. 31, 2020, in violation of PPP rules.
“PPP loans were intended to provide critical relief to small businesses,” said Assistant Attorney General Brett A. Shumate. “The department is committed to pursuing those who knowingly violated the requirements of the PPP and obtained relief funds to which they were not entitled.”
“Every pandemic relief dollar improperly used was money other businesses needed to stay afloat,” said First Assistant U.S. Attorney Bill Essayli for the Central District of California. “My office will continue tracking down individuals and companies who unlawfully took advantage of COVID-19 government aid.”
The PPP, an emergency loan program established by Congress in March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act and administered by the U.S. Small Business Administration (SBA), was intended to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic.
The United States filed a complaint against JMG Investments and Schwartz in August 2024, alleging that they violated the False Claims Act when Schwartz, on behalf of JMG Investments Inc., improperly received two PPP loans in 2020 in violation of PPP rules, and thereafter knowingly and improperly retained the proceeds of the duplicate loan.
The District Court ruled that the United States had shown it was entitled to judgment on all claims asserted against the Defendants and, accordingly, awarded the United States summary judgment.
The judgment against JMG Investments Inc. and Jeffrey Schwartz resolves claims brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.
Defendant/respondent: JMG Investments Inc. and Jeffrey Schwartz
Criminal charges: Violating the False Claims Act by knowingly receiving and retaining more than one Paycheck Protection Program (PPP) loan prior to Dec. 31, 2020, in violation of PPP rules
City and state: Los Angeles, California
Exact date: January 15, 2024
Sentence or outcome: Ordered to pay $1,565,294.38 in damages and penalties
Dollar amounts: $1,565,294.38
Related Federal Cases
- Miranda Devlin, Pandemic Relief Loan Fraud, California 2023 · Texas
- Tamara Yvonne Motley, Medicare Fraud, California 2023 · California
- Sara Jacqueline King, Investor Fraud, California 2023 · Idaho
- Amadou Kane Diallo, Wire Fraud, California 2023 · New Jersey
- Mark Roy Anderson, Wire Fraud, California 2023 · Connecticut
Key Facts
- State: California
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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