Feds: Couple pays nearly $170K after COVID-relief fraud

Officials said the couple used the loan money obtained through the CARES Act to pay off a mortgage in Florida and buy more property.

OXFORD — A Connecticut couple paid nearly $170,000 as part of a civil settlement reached with the federal government over allegations they used small business loans obtained under the CARES Act to pay off mortgages and buy new property in Florida, prosecutors said.

Janine E. Carbonaro and Gerard Carbonaro, of Oxford, recently entered into a civil settlement agreement to resolve the allegations that they misused funds acquired through the CARES Act, according to officials.

The CARES Act was created to provide emergency financial help to individuals, families and businesses hit hard by the COVID-19 pandemic. The act authorized the U.S. Small Business Administration to provide Economic Injury Disaster Loans. It also permitted eligible applicants seeking these loans to request and receive advance grants while their loan applications were pending.

On April 7, 2020, Gerard Carbonaro applied for an EIDL loan and grant advance on behalf of Janine E. Carbonaro, sole proprietor for Hair Attraction Design Team, a hair salon in Monroe.

Prosecutors said the loan documents indicated Janine E. Carbonaro was required to use all the proceeds of the loan “solely as working capital to alleviate the economic injury” caused by the ongoing pandemic.

Instead, federal prosecutors said, the couple used the funds to pay off the mortgage of a residential property in Florida and to buy additional residential property in Florida for personal investment purposes.

“These individuals, motivated by greed, chose to defraud programs intended to bring relief to those in need,” said FBI Special Agent in Charge David Sundberg in a statement. “Justice has prevailed and we will continue to pursue every opportunity to combat COVID relief fraud in the State of Connecticut.”

In a statement Thursday, the Carbonaros’ attorney, Charles Tiernan III, said “by entering into the agreement, the Carbonaros did not admit liability or fraud of any kind. They deny any allegation of fraud and entered into the agreement with the government to avoid protracted litigation.”

Other than having to repay the EIDL loan and grant advance, the Carbonaros also agreed to withdraw a pending application for a loan increase as part of the agreement with the government.