Federal authorities announced charges Wednesday against New York City workers they say conspired in an extensive fraud operation involving dozens of bogus pandemic loan applications.
Fifteen city workers, including seven employees at the New York Police Department, face charges, along with one retired city employee and an employee at a city nonprofit organization.
They stole more than $1.5 million combined, prosecutors said.
“These are individuals who held positions of trust and had strong, stable jobs while so many people struggled during the pandemic,” said Thomas M. Fattorusso, special agent in charge of the New York field office for IRS’s criminal investigations.
Eight of the public workers and the nonprofit employee were charged with a joint conspiracy of working on bogus loans together. The others were charged separately as submitting their own fraudulent loan applications.
According to a criminal complaint filed by the U.S. Attorney’s Office in Manhattan, the employees either invented or aggrandized businesses, then filed for loans Congress made available to small businesses during the early days of the pandemic.
Authorities said Rodney Smith ran the large conspiracy operation. They traced 95 applications back to a single IP address which they tied to Mr. Smith.
They say he charged $5,000 for filing the applications.
Investigators obtained Mr. Smith’s cellphone records and found a text encouraging one of the police department employees to recruit others to the scam — though to be cautious about it.
“Better hit ur ppl b4 this [expletive] is dead, not for just anyone tho, just close Ppl,” Mr. Smith wrote in the message.
The text messages indicate he was paying her at least $500 for her role in recruiting others.
In some cases, the amounts were relatively small.
Authorities say Brandon Boyle, a New York Police Department employee, got a $20,415 COVID-19 Economic Injury Disaster Loan. It was transferred to his bank account on April 29, 2021, delivering a windfall. He’d only had $327.70 in the account before, prosecutors said.
Over the next two months, Mr. Boyle used the money in the account on more than 100 transactions with FanDuel, an online sports gambling outfit.
Another man accused in the new charges, Trevor Gordon, who had recently retired from the city’s corrections department, spent $4,500 of his pandemic loan proceeds at a casino, according to the criminal complaint.
Authorities said the fact that government workers were involved in scams was particularly galling.
“Scheming to steal government funds intended to help small businesses weather a national emergency is offensive. And, as public employees, these folks should have known better,” said Damian Williams, U.S. attorney for the Southern District of New York.
Prosecutors earlier this year charged five employees from the IRS office in Memphis, Tennessee, with scamming COVID funds.
Perhaps even more troubling are the public employees who used their positions to further their scams. Authorities say they have discovered state unemployment agency workers who used their positions to file and approve bogus applications, and found postal workers who were stealing stimulus checks or unemployment benefit cards straight out of the mail stream.
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