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Orange County man sentenced to 2.5 years in federal prison for fraudulently obtaining $1.5 million in COVID relief loans | USAO-CDCA

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SANTA ANA, California – An Orange County man was sentenced today to 30 months in federal prison for fraudulently obtaining more than $1.5 million in Paycheck Protection Program (PPP) COVID relief loans that he used for personal expenses and stock trading.

William Nicoloff Jr., 51, of Mission Viejo, was convicted by U.S. District Judge James V. Selna, who also ordered him to pay $1,554,063 in restitution. At today’s hearing, Judge Selna said Nicoloff’s conduct was ‘extremely disturbing’ as it ‘perverts[ed] a public program designed to help small businesses during a time of severe economic hardship.

Nicoloff pleaded guilty in April 2021 to one count of bank fraud and one count of carrying out an illegal monetary transaction.

From April 2020 to June 2020, Nicoloff obtained six PPP loans by defrauding two banks. To obtain the loans, he submitted false documents to the banks on behalf of four companies he owned and controlled – including Stonecreek Capital Partners and David Capital LLC – as well as himself and another individual. The fraudulent documents included forged bank statements, fake rental agreements, altered incorporation records, fake IRS records, and false employee information.

On the loan applications, Nicoloff falsely certified the number of employees and average monthly payroll of the applicant companies and falsely claimed that Nicoloff did not own any other businesses.

Nicoloff also misrepresented that PPP funds would be used to pay employees and other authorized business expenses, when in fact he intended to use and then used the PPP loan proceeds to finance the personal expenses and non-business related securities trading activities. for which the PPP loans were obtained.

In total, Nicoloff fraudulently obtained $1,554,054 in PPP loans.

Nicoloff transferred $405,880 of David Capital’s loan proceeds to a separate brokerage account and engaged in securities trading and used part of the loan to pay his personal expenses. Nicoloff agreed to forfeit $1,709,151, which includes the $1,554,063 he obtained from the PPP loans as well as the $155,097 in proceeds he earned from securities trading of the illicit loans. These funds were previously recovered by the government from seizures of Nicoloff’s accounts.

The Federal Reserve Board – Office of the Inspector General; the United States Treasury Inspector General for Tax Administration; IRS criminal investigation; and the Small Business Administration – Office of Inspector General investigated this matter.

Assistant United States Attorney Scott Paetty of the Major Fraud Section prosecuted the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to mobilize Department of Justice resources in partnership with government agencies to scale up enforcement and prevention efforts. pandemic-related fraud. The task force strengthens efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies administering relief programs to prevent fraud, among other methods, by increasing and integrating coordination mechanisms existing ones, identifying resources and techniques to uncover fraudulent actors and their agendas, and sharing and leveraging information and knowledge gained from previous enforcement efforts. For more information about the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about alleged attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Disaster Fraud Center hotline at (866) 720 -5721 or via the NCDF online complaint form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.