DOJ: Man concocted ’employees’ to get $8 million forgivable loan

Federal prosecutors unsealed a complaint charging an Arkansas man with fraudulently claiming he had employees so he could receive $8 million in forgivable loans under a program to help businesses weather the coronavirus lockdowns.

In fact, he had no employees at all.

Benjamin Hayford, 32, of Centerton, Arkansas, has been charged with wire fraud, bank fraud, making false statements to a financial institution and making false statements to the Small Business Administration.

The Justice Department explained: “Hayford allegedly sought millions of dollars in forgivable loans guaranteed by the SBA from multiple banks by claiming fictitious payroll expenses. To support his applications, Hayford allegedly provided lenders with fraudulent payroll documentation purporting to establish payroll expenses that were, in fact, non-existent.

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“In addition, Hayford represented to a financial institution that the Limited Liability Partnership for which he applied for relief was established in January 2020 and was operating as of Feb. 15, 2020. In fact, a search of the contents of Hayford’s email account revealed that Hayford did not create the partnership until April 2020, several days before he began applying for Paycheck Protection Program (PPP) loans.”

The special loans are available under the Coronavirus Aid, Relief, and Economic Security Act.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and other federal prosecutors announced the charges.

Under the PPP program, small business operators can apply for special loans with a maturity of two years and an interest rate of 1%. The funds must be used on payroll, rent, interest on mortgages and other specific budget items.

The program allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75% of the forgiven amount for payroll.

It comes under the coronavirus-relief CARES Act adopted in March.

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