A Coventry man has pleaded guilty to defrauding $100,000 in Payroll Protection Program (PPP) funds. John Matava, 59, confessed on Tuesday in U.S. District Court in Bridgeport.
According to court records. Matava applied for a $100,000 PPP loan at Celtic Bank in April of 2020 for a company named J.M. Builders LLC. The bank approved the loan and released the funds to an account controlled by Matava.
Court records say that Matava used those funds for personal expenses between April 2020 and January 2021, including payments to an RV superstore ($4, 777), legal fees for four court cases in Rockville, and $3,398 to a dog breeder.
Matava attempted to receive an additional $100,000 loan from the bank in January 2021, utilizing false statements and tax documents. The bank, however, denied that loan.
He was arrested in January of last year and pleaded guilty to charges of wire fraud affecting a financial institution and making an illegal monetary transaction. The charges carry maximum penalties of 30 years and 10 years in federal prison respectively.
His sentencing is set for March 29th.
Matava is only the latest case of COVID-19 relief fraud and one of the smaller examples.
The PPP loan program was established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, which allowed for rapid disbursement of funds for unemployment insurance, small businesses, families with children, and direct payments to individuals. PPP loans were forgivable amounts provided to small businesses to help them retain employees to lessen the impact on the unemployment sector.
In the years since, there have been dozens of cases of fraud across the country, both in the PPP and Unemployment application process due to the speed of disbursements and volume of applicants.
Here in Connecticut, there have been six cases prosecuted through the state’s federal courts. These cases represent $4,242,000 in fraudulent PPP loans, nearly $800,000 in false unemployment claims, and $1.2 million in theft of municipal funds.
The municipal theft was the most high profile of these cases, which saw city employees, one of whom was a former state representative, sent to prison over the fraud. Michael DiMassa, the former state representative, together with his wife Lauren, were found guilty of creating a fake consulting company and billing the city of West Haven for services that were never rendered. The scam also included associates John Bernardo (a former city employee) and John Trasacco (a local business owner). The funds were reportedly largely used at casinos in the state.
As a result of the scam, Michael DiMassa was sentenced to 27 months in federal prison. Lauren DiMassa was sentenced to 6 months, as was Bernardo. Trasacco received the largest sentence of 97 months. Meanwhile, the fallout went all the way to the top of the city’s leadership, with calls for the mayor’s resignation and an audit that found West Haven had spent relief funds on services that did not qualify.
Stamford’s Moustapha Diakhate represented the largest instance of PPP loan fraud so far prosecuted in the state. According to court records, Diakhate was found guilty of fraudulently receiving more than $4 million in loans from both Citibank and M&T Bank. Court records state that Diakhate filed PPP loan applications for six small businesses in which he maintained ownership or management interest.
He then used the money for various personal expenses “including to pay off a loan he had been provided to purchase of a 2010 Porsche Panamera Turbo, and to purchase both a Mercedes and BMW. He also purchased a $50,000 certificate of deposit with PPP funds, and disbursed funds to various entities and individuals unrelated to his business entities.”
Diakhate was convicted in August of 2022 and sentenced to 42 months in federal prison in October of that year. The banks recovered more than $2 million after the fraud was recovered and Diakhate was ordered to pay restitution for the remaining funds.
In addition to these larger frauds, there were also smaller ones, including $41.666 claimed by Antrum Coston of New Haven. Antrum, who had prior convictions and was on supervised release at the time of the fraud, was sentenced to 37 months in federal prison last September.
Janine E. Carbonardo and Gerard Carbonaro, of Oxford, paid $169,563.60 to resolve the accusation that they had misspent $109,000 in PPP loans.
Meanwhile, Olajuwon “OJ” Harrington, of Waterbury, was sentenced for theft of unemployment benefits which the state claims came to a cost of $793,254.
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