Rockport man faces up to 30 years, $1 million fine following guilty plea for PPP loan fraud
PORTLAND — Rockport resident and former Planning Board member Mark X. Haley II pleaded guilty today, Feb. 8, in U.S. District Court in Portland to a bank fraud scheme in which he filed nine fraudulent Paycheck Protection Program (PPP) loan applications and received over $1 million in fraud proceeds, according to the U.S. Attorney’s Office, District of Maine, in a news release.
According to court records, Mark X. Haley II, 42, filed fraudulent PPP loan applications at two banks for businesses he controlled, the U.S. Attorney’s Office said.
Haley listed false employee and payroll information on each application and submitted fraudulent documents to support the false information to the banks, according to a Feb. 8 news release from the U.S. Attorney’s Office.
“These documents included false federal employment tax returns, fake timesheets and falsified bank records,” the release said. “As a result of the scheme, Haley fraudulently obtained $1,010,581 in PPP funds. He used some of the funds to make a down payment on a sailboat.”
According to the documents: “From at least April 30, 2020, and continuing until at least March 4, 2021, in the District of Maine and elsewhere, Mark X. Haley II knowingly and willfully devised and intended to devise a scheme and artifice to defraud, and to obtain money and property by means of materially false and fraudulent pretense, representations and promises.
“The scheme involved filing false and fraudulent applications for Paycheck Protection Program loans with financial institutions to obtain PPP funds. The PPP was a COVID-19 pandemic relief program administered by the Small Business Administration that provided forgivable loans to small businesses for job retention and certain other expenses. The PPP permitted participating third-party lenders to approve and disburse SBA-backed PPP loans to cover payroll, fixed debts, utilities, rent/mortgage, accounts payable and other bills incurred by qualifying businesses during, and resulting from, the COVID-19 pandemic. PPP loans were fully guaranteed by the SBA.”
The allegations said that Haley submitted false documents to the financial institutions in support of his applications and submitted false quarterly employment tax returns (IRS Forms 941) for the businesses.”
“The forms listed false numbers of employees, false amounts of wages paid, and false amounts of tax withheld from wages,” the allegations read.
“As Haley knew, none of the employment tax returns submitted to the financial institutions and SBA in support of the PPP applications had actually been filed with the Internal Revenue Service. Haley also submitted false payroll records for the businesses in support of his PPP loan applications. These records falsely identified third parties as having worked for the businesses and having received wages from the businesses. Haley knew that the third parties were not employees and had not been paid wages. Haley also submitted false bank statements in support of PPP loan applications. The statements listed nonexistent transactions for the businesses’ bank accounts. Haley knew the bank statements were false.”
The PPP loan applications, as outlined by the U.S. DOJ, were:
|
APPROXIMATE DATE |
APPLICANT |
LENDER |
APPROXIMATE APPLICATION AMOUNT |
|
April 30, 2020 |
Burntcoat Capital LLC |
Bank A |
$62,500 |
|
March 3, 2021 |
Burntcoat Capital LLC |
Bank B |
$101,582 |
|
April 27, 2020 |
Boyaca Trading Company LLC |
Bank A |
$41,666.67 |
|
January 25, 2021 |
Boyaca Trading Company LLC |
Bank A |
$136,805.20 |
|
July 16, 2020 |
Burntcoat – MIA LLC |
Bank B |
$134,375 |
|
March 3, 2021 |
Burntcoat – MIA LLC |
Bank B |
$134,375 |
|
August 6, 2020 |
Eastern Investment Advisors LLC |
Bank B |
$133,333.35 |
|
March 3, 2021 |
Eastern Investment Advisors LLC |
Bank B |
$133,333.34 |
|
February 13, 2021 |
Secure Capital Management, Inc. |
Bank B |
$137,500 |
Haley faces up to 30 years in prison and a $1 million fine. He also faces up to five years of supervised release.
Haley will be sentenced after the completion of a presentence investigation report by the U.S. Probation Office. A federal district judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The Internal Revenue Service, Criminal Investigations investigated the case.
“While many legitimate businesses used PPP loans to keep their businesses afloat, Mark Haley, motivated by personal greed, set his sails on a scheme to obtain lavish luxuries,” said Joleen Simpson, Special Agent in Charge of IRS- Criminal Investigation’s Boston Field Office, in the release. “Today’s plea should serve as a stark reminder that criminals, such as Haley, will be held accountable for their misdeeds.”
Paycheck Protection Plan (PPP): The PPP was a COVID-19 pandemic relief program administered by the Small Business Administration (SBA) that provided forgivable loans to small businesses for job retention and certain other expenses. The PPP permitted participating third-party lenders to approve and disburse SBA-backed PPP loans to cover payroll, fixed debts, utilities, rent/mortgage, accounts payable and other bills incurred by qualifying businesses during, and resulting from, the COVID-19 pandemic. PPP loans were fully guaranteed by the SBA.
