NYC, NY state employees among 17 charged in $1.5M COVID relief loan fraud scheme

A Correction Department captain, NYPD employees and a host of civil servants have been arrested in a scheme to defraud the U.S. government out of more than $1.5 million in pandemic relief funds, officials said Wednesday

“These are individuals who held positions of trust and had strong, stable jobs while so many people struggled during the pandemic,” said Internal Revenue Service Criminal Investigation Special Agent in Charge Thomas M. Fattorusso. “The message that these arrests are sending should be a clear one. Nobody is above the law.”

Officials said 17 city and state employees have been accused of obtaining pandemic relief loans through a fraud scheme that used fake loan applications and bogus revenue and employee numbers..

Many of the applications claimed that the alleged scammers operated hair and nail salons.

In total, 19 alleged conspirators are facing charges, including 17 public employees, who worked for or recently retired from the NYPD, the Department of Education, the Department of Correction, the Department of Transportation, and the city’s Administration of Children’s Services.

Individuals who worked for the MTA, the city’s Human Resources Administration and a non-profit in the city were also charged.

According to prosecutors, those charged spent the loan money on personal expenses, online gambling, personal stock investments, home furniture, electronics, and luxury clothing.

“Scheming to steal government funds intended to help small businesses weather a national emergency is offensive. And, as public employees, these folks should have known better,” said U.S. Attorney Damian Williams.

Accused ringleader Rodney Smith, 54, conspired to file fraudulent applications through the Small Business Administration program in 2020, federal authorities said.

Smith received kickbacks from “applicants” who received loans of up to $60,000

Smith was charged with conspiracy to commit wire fraud, wire fraud and aggravated identity theft.

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