West Texas man pleads guilty to defrauding PPP out of nearly $4 million
DALLAS (CBSNewsTexas.com) — A West Texas man has admitted to defrauding federal programs implemented during the COVID-19 epidemic out of almost $4 million, federal prosecutors announced Friday.
Andrew Travis Johnson, 58, of Plainview, was charged earlier this month with three counts of bank fraud, one count of aggravated identity theft, and one count of engaging in monetary transactions in property obtained through illegal activity. He pleaded guilty earlier today.
In his plea papers, Johnson admitted that he fraudulently applied for and obtained Paycheck Protection Program (PPP) loans that totaled nearly $4 million using three entities: an actual speech and occupational therapy business, an actual nonprofit that organized fundraisers for people with intellectual disabilities, and a fake organization that never had any employees.
Johnson falsely claimed in the business's application that the company paid 49 employees an average of $441,667 per month. He also provided a fake IRS form that show it paid its employees over $5.1 million in 2019. In reality, the business only employed about 10 people on an as-needed basis and paid less than $100,000 in wages in 2019. Thanks to the application, however, the business qualified for a $1.1 million PPP loan, which was taken twice for a total of $2.2 million.
The non-profit's application falsely claimed that it employed 33 people, while in reality the number was less than five. The fake organization's application claimed it employed 24 people, when it did not even exist to begin with.
Johnson provided fabricated lists of employees for both entities. Some of those listed did not exist while others were actually clients. He also submitted fake IRS forms. Through these false applications, Johnson was able to qualify for a $326,770 loan for the fake company and a $523,000 loan for the nonprofit. He redrew the loan for the fake organization the next year for a total of $653,540.
Of the money provided through the PPP loans, very little - if any - was actually used to pay employees or cover expenses. Instead, prosecutors said, Johnson spent almost $3.5 million on home renovations, vacations, clothing, cosmetic surgery, college tuition, cars, wedding expenses, and business equipment.
In addition to the small business loans, Johnson obtained a further $436,524.80 in loans for 11 supposed independent contracts. Many of these supposed contractors were related to Johnson.
The government said that at least four of the "recipients" were not even aware that Johnson used their information to get loans and did not receive any of the money. Johnson opened bank accounts under their names, transferred the loan payments into the accounts, obtained debit cards for each account, and used them to spend the money for himself.
Johnson and others managed to get the principal and interest on each independent contractor loans - which ranged from $15,000 to about $24,000 each - completely forgiven.
As part of the plea agreement, Johnson will pay $4 million in restitution. He also faces up to 102 years in prison. His sentencing date has not yet been set.