Alleged phony PPP loan application led to purchases of late-model luxury cars, mortgage payments

Charges of fraudulently obtaining a $1.5 million loan meant to keep workers employed during the coronavirus crisis – but then using the loan proceeds to buy more than three dozen late-model luxury cars and pay for such things as restaurant bills, purchases at retail stores, and mortgage payments – have been leveled against a Maryland man who was arrested last week, federal authorities said.

In a release, the U.S. Attorney for the Maryland District said Randolph Brooks Jr., 45 of Cheltenham, Md., was charged with wire fraud. According to an affidavit filed with the criminal complaint, the U.S. Attorney alleged that Brooks applied for a Paycheck Protection Program (PPP) loan a year ago of more than $1.5 million using allegedly phony tax forms to back up his claims proving eligibility for the loan. After securing the loan, according to federal law enforcement authorities (including the inspector general for the Federal Deposit Insurance Corp. [FDIC]), Brooks used a complex web of bank accounts to distribute the loan’s proceeds, allegedly largely to himself.

He then, also allegedly, used the funds from those accounts to purchase 39 automobiles (including a Mercedes Benz S Class, two 2017 Infinity Q50s, a 2015 Cadillac Escalade, a 2005 Bentley Continental, and a 2018 Tesla Model 3). “Under the terms of the PPP loan program, the purchase of these vehicles is not an appropriate use of loan funds,” the U.S. Attorney noted.

“According to the affidavit, on July 30, 2020, Brooks initiated a wire transfer from his personal account to Tesla Motors for $60,407, which was used to purchase a 2018 Tesla Model 3,” the release stated. “’Rudolph Brooks’ was listed as the customer for this vehicle, and a District of Columbia driver’s license was on file for a close relative of Brooks. Records from the State of Maryland reflect that the Tesla Model 3 was registered in Brooks’s name at Brooks’s Cheltenham residence.”

He also allegedly used the proceeds of the PPP loans for personal expenditures including credit card bills, purchases at restaurants, retail stores, grocery stores, automotive auctioneers, and mortgage payments for his Cheltenham residence, law enforcement authorities said.

Beyond that, the U.S. Attorney said, warrants authorized the seizure of up to nearly $2.3 million from 11 bank accounts and the 2018 Tesla Model 3. The affidavit in support of the seizure warrants alleges that these funds and vehicle constitute or are derived from the proceeds traceable to false statements made on bank loan applications, the U.S. Attorney said.

Brooks, who was arrested April 2, faces a maximum sentence of 20 years in federal prison for wire fraud followed by three years of supervised release if convicted (actual sentences are typically shorter than the maximum allowed, the U.S. Attorney noted).

Maryland Man Facing Federal Charge for Fraudulently Obtaining a $1.5 Million Paycheck Protection Program Loan and Attempting to Obtain at Least Two Additional Fraudulent Covid-19 Relief Loans

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