Miami neighbors got $1.1million in coronavirus relief funds by 'falsely claiming to run farms in their backyards and pretending to have employees for two other businesses'
Two Florida neighbors face federal charges over allegedly faking farms they claimed to run out of yards in the middle of Miami as part of successful efforts to obtain $1.1million in coronavirus small business relief funds.
The US Department of Justice said in a media alert that Latoya Stanley, 38, and Johnny Philus, 33, both of Miami, were arrested and charged with wire fraud and making false statements Wednesday, in connection with making false PPP and EIDL loan applications for their businesses and farms.
PPP loans are meant to help small business owners cover business-related expenses and payroll needs during the pandemic, while EIDL loans are meant to cover working capital and normal operating expenses, such as rent, employee health care benefits and utilities. Both loans are forgivable.
Neighbors Latoya Stanley, 38, and Johnny Philus, 33, were arrested for allegedly receiving $1.1million in coronavirus relief funds after claiming to run companies from their home
Authorities alleged in their complaint, which was unsealed after Stanley and Philus' court appearance, that the two neighbors had participated in a scheme to file fraudulent loan applications seeking more than $1.1million in forgivable Paycheck Protection Program and Economic Injury Disaster Loans loans.
According to the Justice Department, the neighbors put in four, fake loan applications which were ultimately approved by a local, unnamed bank.
In Stanley's PPP application, the government says Stanley claimed to run a company called Dream Gurl Beauty Supply LLC that employed 18 people and had $200,000 in inventory.
The government said Philus claimed to have a farm at this property, which generated $400,000 in income and employed 10 people
Stanley and Philius listed their duplex as the address for their individual businesses. Stanley said she had a farm at that property. Philius said his farm was at another home
And in her EIDL application, she allegedly claimed to rake in over $800,000 in income from a farm she operated in the yard of a Miami home and had five people working for her there.
The government also said that Philus, in his PPP application, claimed he had 29 people working at his company, Elegance Auto Boutique LLC, which leased 40 to 50 cars worth a $1million.
In his EIDL application, the government said Philus claimed to have a farm in the yard of a small residential home, which generated $400,000 in income and employed ten people.
Court documents obtained by the Miami Herald revealed that Stanley and Philius' business addresses were listed as a duplex building located on one-sixth of an acre - or 6,900 square feet - of land. Public records indicate the property is a 1,938 square foot, four-bedroom, two-bathroom home.
Meanwhile, public records indicate Philus' supposed farm was located on a 7,300 square foot lot with a 1,000 square foot, two bedroom, 1 bathroom home on it.
The government said that Stanley and Philus neither employed anybody nor had farms in reality, but that the two neighbors had worked together to pull off the fraud.
Despite this, a bank approved PPP and EIDL loans for them in the amount of $1.1million, the government said.
According to the criminal complain, Stanley's Dream Gurl landed $302,860 in PPP loans, while her 'farm' got $137,500 in EIDL loans.
Philius' Elegance Auto got $538,325 in PPP loans, while his 'farm' was given $150,000 in EIDL loans.
State records indicate that both Stanley and Philius' businesses were inactive, according to the newspaper.
It's unclear whether the two neighbors had spent the loan money or what they might have used it for.
Since the PPP and EIDL loans were authorized at the end of March, the government has been slowly bringing charges against people who made false loan applications that resulted in their obtaining millions in the forgivable loans.
In July, Andrew Marnell, 40, of Los Angeles, was arrested and ordered to be held without bond on Thursday for allegedly fraudulently obtaining some $9million in PPP loans, which he allegedly used to gamble in Las Vegas and buy a Range Rover and two motorcycles.
And, in June, a federal grand jury has indicted reality TV star Maurice Fayne on charges including running a Ponzi scheme for allegedly using an almost $2million PPP loan meant for his trucking company, to buy jewelry, put a down payment on a Rolls-Royce and pay off people involved in an alleged Ponzi scheme.