Recently, a 59-year old resident of Coventry admitted to abusing $100,000 in Payroll Protection Program (PPP) funds. The guilty plea by John Matava occurred on Tuesday in the U.S. District Court, Bridgeport.
The court records state that Matava fraudulently applied for a $100,000 PPP loan in April 2020 through Celtic Bank for his company, J.M. Builders LLC. The bank approved the loan, depositing the funds into an account Matava had control over.
Matava used the funds for his personal expenses between April 2020 and January 2021, such as an RV superstore payment, legal fees for several court cases in Rockville, and payment to a dog breeder.
Matava also attempted to acquire a further $100,000 loan from the bank in January 2021, using false statements and tax documents, but the bank rejected this loan request.
Matava was apprehended in the previous year of January, subsequently pleading guilty to making an illegal monetary transaction and wire fraud affecting a financial institution. Both these charges carry potential maximum penalties of 10 and 30 years in federal prison respectively.
His hearing for sentencing is scheduled for March 29th.
Matava represents just another recent case of COVID-19 relief fraud, albeit a relatively small instance.
The PPP loan initiative was set up under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. This act facilitated quick distribution of funds to unemployed individuals, families with children, small businesses, and individuals. The PPP loans aimed to support small businesses in maintaining their staff to reduce unemployment rates.
However, across the US, there have been numerous fraud cases related to the PPP and Unemployment application processes because of the fast disbursement and high volume of applications.
In Connecticut alone, six cases have been prosecuted via the state’s federal courts, these cases represent almost $800,000 in fraudulent unemployment claims, $4,242,000 in fraudulent PPP loans and theft of municipal funds worth $1.2 million.
The most notorious case involved theft of municipal funds, which led to the imprisonment of city employees, including a former state representative. The involved parties created a fake consulting company and billed the city of West Haven for nonexistent services, significantly spending the money at casinos in the state.
The largest instance of PPP loan fraud in the state was perpetrated by Moustapha Diakhate of Stamford, who fraudulently received over $4 million in loans from Citibank and M&T Bank by filing PPP loan applications for multiple small businesses he had an interest in. He used the funds to settle personal expenses including purchasing a Porsche Panamera Turbo, a Mercedes, a BMW, and a $50,000 certificate of deposit. Diakhate was sentenced to 42 months in federal prison.
Additionally, there have been smaller fraud cases such as the one by Antrum Coston who falsely claimed $41.666 and Gerrard Carbonaro and Janine E. Carbonardo, who had to pay $169,563.60 to resolve accusations of misusing $109,000 in PPP loans. Similarly, Olajuwon “OJ” Harrington was sentenced for the theft of unemployment benefits totaling to $793,254.
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Contents
Frequently Asked Questions
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What is the Payroll Protection Program (PPP)?
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The Payroll Protection Program (PPP) is an initiative that was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The aim of this program was to provide forgivable loans to small businesses, with the intent of aiding them maintain their workforce during the COVID-19 pandemic.
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What was the outcome of Moustapha Diakhate’s fraud case?
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Moustapha Diakhate was convicted in August 2022 of fraudulently obtaining more than $4 million dollars through PPP loans. He was subsequently sentenced to 42 months in federal prison in October 2022. Post fraud discovery, the banks was able to recover over $2 million, and Diakhate was ordered to pay restitution for the remaining amounts.
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What actions were taken against the significant instance of municipal fund theft in Connecticut?
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The significant instance of municipal fund theft, orchestrated by city employees in Connecticut, resulted in federal prison sentences for the culprits. The fraud involved creating a ghost consulting company and billing the city of West Haven for services that were not provided. The fallout also impacted the city’s leadership.
