South Florida Sun-Sentinel (Sunday)
How fraud rings got $20M in relief aid
They started modestly: a couple sham applications for Uncle Sam’s money that was meant for small businesses struggling through a once-in-a-lifetime pandemic. When the applications paid out, enterprising South Florida crooks saw bigger dollar signs.
They recruited more people to process loans for and pocketed large kickback fees. Their customers turned into recruiters themselves, rounding up friends, family members and anyone they could find that wanted to get rich quick.
Hundreds of applications for dormant businesses in Florida, Ohio, Georgia and South Carolina were stitched together from the same few computers in South Florida. They used the same forged documents and made up payroll figures to make it seem as though they were being crushed by the economic downturn.
As soon as the funds were paid out, chunks of the money were wired to the same bank accounts for kickback fees. The rest was spent on Ferraris, luxury bags, trips and jewelry — anything but what they were meant for.
Slowly, business owners were picked off in early arrests by the FBI. Some turned into informants.
Eventually, federal investigators realized that two organized crews of COVID relief scammers had taken the government for over $20 million.
A review of over a dozen federal court by the South Florida Sun Sentinel — implicating everyone from sham business owners to the architects of the plans — illustrate how the schemes paid out millions.
More than 20 people who devised, recruited or profited from the schemes have been arrested. They make up more than half of all relief scammers arrested in South Florida over the past year.
The FBI says another 50 arrests are close.
The ‘fix was in’
The largest scheme in South Florida is responsible for filing 90 sham loans that stole nearly $18 million. It was cracked after a man from Ohio received a $554,000 loan in May 2020 that was processed from an IP address in Hollywood.
The FBI questioned the man about the loan, and he said James Stote and Ross Charno, two South Florida men, helped him get it. He became an informant and told the FBI about Stote and Charno’s brazen plan to make themselves and others rich off money meant for the hardest-hit Americans, according to prosecutors.
Stote and Charno assured the informant their plan was foolproof because they had someone at a bank making sure loans were being approved. The informant told federal investigators it was clear the “fix was in.”
After his loan was approved, the informant was given instructions to wire a cut of the money to Stote and Charno and make the payments seem like remodeling fees. By June, prosecutors say Stote and Charno processed dozens of loans in a similar fashion.
In May, Stote started getting large transfers of money from companies that had recently been approved for loan funds, bank records show.
Nine transfers that month show he made almost $800,000 in in kickback fees for $3.5 million in fake loans paid out to his clients, prosecutors said.
He processed one of those loans for Phillip Augustin, who managed professional football players, according to prosecutors. After seeing how easy the money was delivered, Augustin offered up his services as a recruiter.
Over a six-week period, prosecutors say he made $900,000 by referring new clients to the scheme and collecting kickback payments.
The same financial documents were forged over and over for the applications, and they were all filed from the same IP address in Broward County, prosecutors said. More than $2.4 million in kickback money was paid in cash or through wires to the same accounts and sent off to smaller brokers.
Clients included Joshua Bellamy, a former NFL wide receiver who got $1.25 million. Prosecutors say he blew a large chunk at the Seminole Hard Rock Hotel and Casino. Another client, Diamond Blue Smith, spent part of his $426,000 payout on a black Ferrari, prosecutors said.
Dennes Garcia, of Georgia, netted about $286,000, according to prosecutors. After paying $71,000 in kickback fees, he cut himself a fat check. “Just wrote myself a $100,000 check,” he texted a friend, according to federal court documents.
‘How much do you want me to try and get?’
Around the time these payouts occurred, another South Florida crew was up to the same thing, according to federal court documents.
Wally Dorlus, a tax preparer in Plantation; Margenson Marc, the manager of an investment company in Deerfield Beach; and Roberto Geronimo, the owner of a liquor store in Miami Beach, submitted 167 loan applications between May and August, prosecutors said.
They weren’t as successful as Stote and Charno. Only 20% of their loans paid out, to the tune of $6 million, according to prosecutors.
Dorlus was the main man submitting cookie-cutter fake loans, according to prosecutors. But all three men recruited additional applicants to provide them with basic company, employee and payroll information they fudged and used for applications in exchange for kickbacks, according to prosecutors.
In November, the FBI searched Dorlus’ tax business after getting hip to the scheme.
In a filing cabinet they found printouts from the Florida secretary of state for dozens of businesses he had submitted loan applications for. Many had handwritten notes with names, dates of birth and Social Security numbers and other information needed to process the loans.
For many applications, Dorlus created email addresses in the names of the applicants used on the loan applications, prosecutors said. In his office the FBI found a legal pad with a list of the email addresses and passwords.
For his efforts, he made out with $240,000 in kickback money before he was arrested in March, according to prosecutors.
From June to August, Marc made about $47,000 in kickback for applications submitted by Dorlus, prosecutors said.
One of his recruits turned into an informant.
In June, Marc messaged the informant asking for information related to his business. He also asked the informant to tell him “how much do you want me to try and get for you?”
Marc told him the fee for the loan was 20% of the funds, the informant said. When the informant tried to bargain, Marc told him he would waive the fee if he brought him 10 more loan applicants, prosecutors said.
Geronimo was one of those referrals.
In February 2020, he was arrested by the FBI and accused of selling more than
5 kilos of cocaine in Miami, according to court documents. While out on bond, he met with the informant in June at a Hooters, prosecutors said.
The informant broke down how the fraud worked. And soon after, Dorlus submitted an application for Geronimo. Geronimo made
$250,000, thanks to Dorlus’ fudged numbers, according to prosecutors.
From June to July, Geronimo spent about $212,000 on personal expenses and kickback payments, prosecutors said. He spent another
$11,000 at a Miami jewelry store.
After learning about the kickback scheme, he volunteered to recruit more people for a 5% cut of their profits. He roped in 15 people before he was arrested in March, prosecutors said.