Florida recording artist and Pennsylvania man charged in $24 million COVID-relief fraud scheme

 

Date: October 6, 2020

Contact: newsroom@ci.irs.gov

Miami, Fl. -- A Florida recording artist and a Pennsylvania towing company owner have been charged for their alleged participation in a scheme to file fraudulent loan applications seeking more than $24 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announced Acting Special Agent in Charge Tyler R. Hatcher of the IRS-Criminal Investigation (CI) Miami Field Office.

Diamond Blue Smith of Miramar, Florida, and Tonye C. Johnson of Flourtown, Pennsylvania, were charged in federal criminal complaints filed in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud. Smith was arrested and appeared yesterday before U.S. Magistrate Judge Regina D. Cannon of the Northern District of Georgia. Johnson was arrested on Oct. 1, 2020, and appeared on Oct. 2, 2020, before U.S. Magistrate Judge Henry S. Perkin of the Eastern District of Pennsylvania. The complaints were unsealed today.

The criminal complaint against Smith alleges the following: Smith, a recording artist, obtained a PPP loan of $426,717 for his company, Throwbackjersey.com LLC, using falsified documents. Upon completion of that loan, Smith then sought and obtained another PPP loan of $708,065 for his other company, Blue Star Records LLC, using falsified documents. Smith purchased a Ferrari for $96,000 and made other luxury purchases using PPP loan proceeds. Authorities seized the Ferrari at the time of Smith's arrest. He also withdrew $271,805 in loan proceeds. The complaint further alleges that Smith sought PPP loans on behalf of others in order to receive kickbacks for those confederates.

The criminal complaint against Johnson alleges the following: Johnson obtained a PPP loan of $389,627 for his own company, Synergy Towing & Transport LLC using falsified documents. Johnson paid a portion of the loan proceeds to co-conspirators in the scheme.

According to the complaints, Smith and Johnson conspired with others to obtain millions of dollars in fraudulent PPP loans. It is alleged that early in their scheme, Smith and Johnson's co-conspirator, Phillip J. Augustin, obtained a fraudulent PPP loan for his talent management company using falsified documents. After submitting that application, Augustin then began to work with other co-conspirators on a scheme to submit numerous fraudulent PPP loan applications for confederate loan applicants, in order to receive kickbacks for obtaining the forgivable loans for them, say the court documents. The complaints allege that the scheme involved the preparation of at least 90 fraudulent applications, most of which were submitted. According to the complaints, Augustin, Smith, Johnson, and other conspirators in the scheme applied for PPP loans that are together worth more than $24 million. Many of those loan applications were approved and funded by financial institutions, paying out at least $17.4 million.

The following 11 defendants are accused in other unsealed complaints of being involved in this fraud scheme:

  • Joshua J. Bellamy of St. Petersburg, Florida, was charged in a federal criminal complaint filed on Sept. 9, 2020, in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud;
  • Tiara Walker of Miami Gardens, Florida, was charged in a federal criminal complaint filed on Sept. 3, 2020, in the Southern District of Florida, with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud; 
  • Damion O. Mckenzie of Miami Gardens, Florida, was charged in a federal criminal complaint filed on Aug. 3, 2020, in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud;
  • Andre M. Clark of Miramar, Florida, was charged in a federal criminal complaint filed on Aug. 3, 2020, in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud;
  • Keyaira Bostic of Pembroke Pines, Florida, was charged in a federal criminal complaint filed on Aug. 3, 2020, in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud;
  • Phillip J. Augustin of Coral Springs, Florida, was charged in a federal criminal complaint filed on July 28, 2020, in the Northern District of Ohio with wire fraud, bank fraud, conspiracy to commit wire fraud and bank fraud, and obstruction;
  • Wyleia Nashon Williams of Ft. Lauderdale, Florida, was charged in a federal criminal complaint filed on July 28, 2020, in the Northern District of Ohio with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud;
  • James R. Stote of Hollywood, Florida, was charged in a federal criminal complaint filed on June 24, 2020, in the Northern District of Ohio with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud;
  • Ross Charno of Ft. Lauderdale, Florida, was charged in a federal criminal complaint filed on June 24, 2020, in the Northern District of Ohio with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud;
  • Deon D. Levy of Bedford, Ohio, was charged in a federal complaint filed on June 8, 2020, in the Northern District of Ohio with wire fraud and conspiracy to commit wire fraud; and
  • Abdul-Azeem Levy of Cleveland, Ohio was charged in a federal complaint filed on June 8, 2020, in the Northern District of Ohio with wire fraud and conspiracy to commit wire fraud.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be entirely forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses a certain amount of the PPP loan proceeds on payroll expenses.

A federal criminal complaint is merely an accusation. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The Smith and Johnson cases were investigated by the IRS-CI Miami and Cincinnati Field Offices, the FBI's Miami and Cleveland Field Offices, and the SBA-OIG.

Assistant U.S. Attorneys Aimee Jimenez and David Snider for the Southern District of Florida and Trial Attorney Philip Trout of the Criminal Division's Fraud Section are prosecuting the cases.