The US Department of Justice (DOJ) arrested a Houston resident for allegedly fraudulently accessing over $1.1 million of Paycheck Protection Program (PPP) loans and using it to buy cryptocurrency.
The Suspect Took PPP Loans on Behalf of 2 Companies
On Tuesday, Times Record News reported that Joshua Thomas Argires, 29, was taken into custody by the DOJ for fraudulently obtaining and using $1.1 million of PPP loans for personal expenses and buying cryptocurrency.
For those unfamiliar, the PPP is a loan meant to offer a direct incentive for small companies that seek to keep their staff on the payroll. This program was created specifically to help businesses survive the coronavirus crisis. The PPP, whose total value is $669 billion, was established by the 2020 US government Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help companies, self-employed workers, certain nonprofits, and other entities that need to pay their workers during the lockdown measures.
The DOJ alleged that Argires made false claims to financial institutions, engaged in wire and bank fraud, and conducted illegal monetary transactions. The Houston resident filed for two PPP loans on behalf of two different companies – an entity called Texas Barbecue and another one titled Houston Landscaping. He falsely stated that the two businesses had many workers and hundreds of thousands of US dollars in payroll expenses.
Argires Used Funds to Buy Cryptocurrency
The criminal complaint, which was unsealed on Monday, says that neither of the two businesses has the number of employees or the payroll expenses declared by Argires. The suspect allegedly obtained funds from the loans, but he didn’t use it to pay workers.
The complaint says that the loans received for Texas Barbecue were invested in a cryptocurrency account, though it doesn’t name any specific digital currency. The funds obtained on behalf of Houston Landscaping were deposited into a bank account and withdrawn in tranches through ATMs.
Companies that manage to obtain PPP funding must use the money according to predetermined rules. They have to spend on payroll costs, utilities, rent, and interest on mortgages. Even when gained in accordance with the law, businesses are not allowed to reinvest the PPP loans. If used properly, the principal and interest of the loan may be forgiven.
On a side note, it’s important to mention that a federal criminal complaint is an accusation. During the trial, the defendant is still considered innocent until proven guilty.