The Department of Justice has announced the arrest of a Florida man in connection with Paycheck Protection Program (PPP) loan fraud. David T. Hines, 29, of Miami, Florida, was arrested and charged with fraudulently obtaining $3.9 million in PPP loans and using those funds, in part, to purchase a 2020 Lamborghini Huracan sports car. Authorities seized the $318,000 sports car and $3.4 million from bank accounts at the time of the arrest.
The PPP offers billions of dollars in potentially forgivable loans to keep workers on the payroll, guaranteed by the Small Business Administration (SBA).
According to the complaint, Hines applied for approximately $13.5 million in PPP funds to pay employees. However, it’s alleged that those employees either didn’t exist or were paid a fraction of what Hines claimed. Hines’ state and bank records showed little to no payroll expense during this period.
The complaint alleges that Hines tried to secure $13.5 million in PPP loans on behalf of four different companies. Those companies were Unified Relocation Solutions, LLC; Promaster Movers, Inc.; Cash in Holdings, LLC; and We-Pack Moving, LLC. At least one of those companies was listed as inactive on the Florida Department of State website; two others were reinstated in March of 2020. None of the companies have websites, and investigators reported that many online reviews on third party sites allege bait-and-switch practices and other deceitful activities.
The PPP lender, thought to be Bank of AmericaBAC, is identified as “based in Charlotte, North Carolina, with branches throughout the country” and noted “BOA” in the complaint.
The bank approved three applications for Hines, and he was paid $3,984,557.00. For those three applications, Hines claimed that he supported 70 employees, with monthly payroll expenses totaling $4 million. However, the books for the preceding months indicated monthly inflows and outflows of just $200,000 per month. Transfers or payments that might resemble payroll were in small amounts payable to just 12 different people. Records indicate that Hines didn’t file any payroll information returns with Florida officials from 2015 to 2020.
According to the feds, Hines spent the money on personal expenses, including dating websites, luxury jewelry, clothing retailers (including Saks Fifth Avenue), and Miami Beach resorts like the Fontainebleau. And within days of getting the PPP funds, he purchased a Lamborghini, which he registered jointly in his name and the name of one of his companies.
Interestingly, Hines also made $30,000 in payments simply noted “Mom.”
Hines has been charged with one count of bank fraud, one count of making false statements to a financial institution and one count of engaging in transactions in unlawful proceeds. A hearing has not yet been scheduled in the case.
This case was investigated by the Justice Department, the Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG), the U.S. Postal Inspection Service (USPIS), the U.S. Small Business Administration (SBA)-OIG, IRS-Criminal Investigation (CI), and the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection-OIG.
These kinds of arrests are not unexpected. In May of this year, David A. Staveley (a/k/a Kurt D. Sanborn) of Andover, Massachusetts, and David Butziger of Warwick, Rhode Island, were accused of conspiring to illegally obtain funds through the PPP loan program. In the press release announcing the charges, the Justice Department warned other PPP loan applicants that the FBI and other federal law enforcement agencies would aggressively pursue fraud charges against anyone who attempted to defraud the PPP loan program. At least 15 individuals have been charged to date in similar cases, including defendants in Virginia, Texas, and Ohio.
As part of my reporting for that story, I ended up having a conversation with Jeff Grant, who explained that he understood this story all too well: he served almost fourteen months in federal prison for a white-collar crime. That crime was related to improperly taking an SBA loan following 9/11. Grant and I subsequently had a conversation (you can listen to it as part of the podcast here).
The government asks that anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form: JusticeNCDF Disaster Complaint Form
