David T. Hines, owner of a South Florida moving business, was arrested July 24 after using money he received from the Small Business Administration’s Paycheck Protection Program to pay for a Lamborghini Huracan Evo, jewelry and clothes, stays at high-end hotels and other inappropriate expenses, according to www.miamiherald.com.
Authorities say Hines had received $4 million in COVID-19 relief loans for his supposedly ailing South Florida moving business, and the sports car—purchased by Hines in May for $318,497—was not on the list of permissible expenses under the PPP, which is meant to protect employees and cover other legitimate costs, such as rent, during the COVID-19 pandemic.
Hines’ case and other similar fraud cases are starting to emerge in South Florida and other parts of the U.S. The PPP loans are forgiven by the government if they are properly used by businesses, and Congress is considering another major SBA loan infusion as the pandemic continues to damage the U.S. economy.
Federal investigators linked the Lamborghini to Hines, who appeared in Miami federal court on fraud and other charges July 27, after he was involved in a hit-and-run accident July 11. Hines was held over the weekend at the Federal Detention Center and was granted a $100,000 bond by Magistrate Judge John O’Sullivan. His arraignment is scheduled for Oct. 14.
According to a criminal complaint, Hines’ four South Florida moving businesses applied for seven SBA loans totaling $13.5 million through Bank of America, saying the money would be spent on at least 70 employees with a monthly payroll of $4 million. The bank approved three of his applications, totaling nearly $4 million.
In reality, Hines’ companies showed monthly revenue and expenses averaging about $200,000, which is “far less than the millions of dollars in payroll that Hines sought in the PPP applications,” states a criminal affidavit.
Assistant U.S. Attorney Michael Berger said certain SBA loan scammers have been able to exploit the PPP because although the federal agency is guaranteeing the COVID-19 relief loans issued by banks for eligible small businesses, it is not checking any of the claims in their applications.
According to the criminal affidavit, Hines did not spend all the SBA funds. Bank of America closed his moving companies’ accounts, and they showed a balance of about $3.5 million but no repayments on the loans.
