Robert Benlevi, $27 Million PPP Fraud, California 2020

Robert Benlevi, a 52-year-old man from Encino, California, was arrested in Los Angeles on criminal charges related to his alleged bank fraud, false statements in a loan application, and money laundering arising from the submission of fraudulent applications for Paycheck Protection Program (PPP) funds.

According to court documents, Benlevi submitted 27 bank loan applications to four banks between April and June 2020 on behalf of eight companies solely owned by Benlevi. In the applications, Benlevi allegedly sought a total of $27 million in forgivable PPP loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

In his fraudulent applications, Benlevi allegedly represented that each of his companies had 100 employees and average monthly payroll of $400,000, even though he knew that the companies did not have any employees or payroll expenses. Benlevi also submitted fabricated IRS documents falsely stating that each of the companies had an annual payroll of $4,800,000.

The indictment alleges that based on Benlevi’s fraudulent loan applications, three of Benlevi’s companies — 1Stellar Health LLC, Bestways2 Health LLC, and Joyous-Health4U LLC — obtained $3 million in PPP funds. Although Benlevi falsely represented that the funds sought through the PPP loan applications would be used to pay payroll and certain other business expenses, he instead used them for personal expenses, including cash withdrawals, payments on his personal credit cards, and transfers to other personal and business accounts he controlled, the indictment alleges.

In a single day, Benlevi withdrew from the Bestways2 Health account $248,000 of PPP funds in cashier’s checks, which were deposited into other accounts that Benlevi controlled.

Benlevi is charged with six counts of bank fraud, six counts of false statements in a loan application, and four counts of money laundering. Each count of bank fraud and false statements in a loan application carries a maximum penalty of 30 years in federal prison, and the money laundering counts each carry a maximum penalty of 10 years. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI, SBA OIG, and FDIC OIG are investigating the case. Trial Attorneys Emily Culbertson and Helen Lee of the Justice Department’s Criminal Division’s Fraud Section are prosecuting the case.

Benlevi’s scheme was part of a larger effort to defraud the PPP, which was designed to provide emergency financial assistance to small businesses affected by the COVID-19 pandemic. The CARES Act, which was enacted on March 29, 2020, authorized up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses.

The PPP allows qualifying small businesses and other organizations to apply for loans of up to $10 million. The loans are forgivable if the business uses the funds for payroll and certain other expenses. However, Benlevi’s scheme highlights the vulnerabilities of the program to fraud and abuse.

Benlevi’s arrest marks the latest in a series of high-profile cases related to PPP fraud. In the months since the PPP began, the Fraud Section has prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.

Source: https://www.justice.gov/archives/opa/pr/los-angeles-man-arrested-27-million-ppp-fraud-scheme