Who is Gregory Blotnick? Florida hedge fund manager stole $4.6M in Covid-19 PPP loans in 1 year
MANHATTAN, NEW YORK: A hedge fund manager was charged with 33 counts of grand theft and fraud for allegedly embezzling millions of dollars in Covid-19 Paycheck Protection Program (PPP) loans. The dual-resident of New York and Florida was held on $500,000 bail after arraignment at the Manhattan Supreme Court on July 21.
Gregory Blotnick, 34, allegedly stole $4.6 million from the PPP plan by registering many false loan requests for his New York based firms, Brattle Street Capital LLC and BSC Management LLC over a one-year period, state prosecutors said according to New York Post. Manhattan District Attorney had in a release in April 2021 stated that Blotnick applied for PPP loans at five lending institutions, misrepresenting the number of employees at each of his various companies and falsely certifying that the loan proceeds would be used to cover associated payroll costs. Based on those misrepresentations, he was awarded approximately $2.4 million in PPP loan proceeds. Instead, he transferred the funds to a brokerage account and lost millions in the stock market, prosecutors said.
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We have earlier reported many such cases in the past. The PPP was introduced to offer forgivable loss to the smaller business through banks working with the SBA, who were struggling to stay afloat and earn a living due to the pandemic recession, however social media was not happy with the recipients of this loan. In 2020, we reported a high-profile case of an Instagram celebrity, Hushpuppi who scammed 1.9M people off $435M including fraudulent Paycheck Protection claims. A few months back, we reported how Maryland pastor, Rudolph Brooks Jr, bought 39 cars including Tesla with fraudulent $3.5M Covid PPP loans.
Who is Gregory Blotnick?
Blotnick, a resident of West Palm Beach, Florida, pleaded not guilty and was held on $500,000 cash bail, which his attorneys claimed that he cannot afford. Prosecutors contended for a larger bail amount, claiming Blotnick is a flight risk as he attempted to leave the country in April 2021. Defense advocates argued the money manager is broke and that he has just finished a substance abuse treatment program and is now taking medication for bipolar disorder, as they pleaded for mercy.
If convicted, Blotnick will face 8.5 to 25 years in prison. “Mr. Blotnick repeatedly took advantage of a system intended to provide lifelines to small businesses and their employees during the height of the COVID-19 pandemic,” District Attorney Cy Vance wrote in a press release when Blotnick was charged in April 2021. The investor is also facing federal charges of embezzling around $4 million from the plan by misrepresenting loan applications for three other firms. Blotnick’s attorney, Jason Berland, stated that Blotnick is expected to plead guilty to the federal charges next week. He’s due back in Manhattan criminal court on October 19, 2021.
Blotnick spent the money to buy more than $3 million in losing stock trades, federal prosecutors said. “The Justice Department and its law enforcement partners remain committed to aggressively pursuing and holding accountable fraudsters who treat COVID-19 relief programs like a personal piggy bank,” Acting US Attorney Rachael Honig for the District of New Jersey wrote in May 2021.
The Coronavirus Aid, Relief, and Economic Security (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.