NJ businessman charged over fraudulently obtaining $2M in PPP loans

Photo credit Getty Images

HAWTHORNE, N.J. (1010 WINS) -- Federal prosecutors earlier this week charged a New Jersey businessman for fraudulently obtaining nearly $2 million in federal Paycheck Protection Program (PPP) loans meant to help small businesses during the COVID-19 pandemic.

According to a release by U.S. Attorney Craig Carpenito, 48-year-old Rocco A. Malanga was charged with wire fraud, two counts of bank fraud, and one count of money laundering.

Officials said Malanga submitted at least three PPP loan applications on behalf of three different businesses that fabricated their number of employees and average monthly payroll and diverted the loan funds to accounts that were controlled by his relatives, including his young children, and to another company that did not obtain a PPP loan.

A criminal complaint lists Cloud Accounting LLC, as being approved for $564,632 on April 27, Cedar Grove Transportation Inc., approved for $441,260 on June 3 and Pixie Hollow as the business that received the majority of the funds at $810,204, on Aug. 3.

The PPP loans were part of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency financial relief Americans suffering from the economic effects of the coronavirus pandemic and included the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses.

Malanga submitted a PPP loan application for one of his companies with documentation that supported a claim the company had 47 employees, a monthly payroll of $324,081 and paid employees approximately $3.9 million in 2019, according to federal prosecutors.

IRS records on the other hand showed that the company paid no salaries or wages that year.