Today, the Department of Justice unsealed documents stating it had taken a Houston man into custody on fraud charges. Joshua Thomas Argires, 29, is accused of lying to financial institutions, engaging in unlawful monetary transactions, and committing wire and bank fraud relating to PPP loans.
Argires applied for two PPP loans for the companies “Texas Barbeque” and “Houston Landscaping.” As per court documents, Texas Barbeque does not exist, and Houston Landscaping only lists Argires as an employee. These companies did not have nearly enough employees or expenses to qualify for the $1.1 million in loans received.
Funds Spent on Cryptos
The government alleges the loan for Texas Barbeque was used to buy cryptocurrency on Coinbase, which soon began generating profit. The Houston Landscaping loan found its way to a bank account, and slowly drained via ATM’s. The court case is pending.
Earlier this year, the PPP loan program received over $500 billion in government funds. The program is a forgivable loan plan allowing businesses to continue operating as the coronavirus delays a widespread economic recovery. Per the law, PPP funds can pay certain operating costs, including payroll, utilities, rent, etc.
Trouble with Transparency
Unfortunately, the PPP and other loan programs have been fraught with turmoil since its creation. Aside from running out of money, there appears to be little oversight or transparency in the program.
While business owners are the ones filing for loans, which ones received them is “proprietary information,” according to Treasury Secretary Steve Mnuchin. Aside from mal intent, it could be a matter of not knowing exactly who got what, according to Mehrsa Baradaran of the University of California, Irvine’s Law Department. “Part of this bill is they left it a lot up to banks. And it’s possible that they just don’t know where the funds went . . . It’s possible that they do know, and they don’t want us to know.”
Either way, this seems like a mistake. When the banks received their bailout in the 2008-09 financial crisis, they kept records. This list is still available as a public record. When it does know who received funding, the Federal Government has a spotty record of performance.
Working off an admittedly incomplete data set, Forbes reports that while utilities retained only 51 employees per $1 million spent, management companies retained 85 customers per $1 million. Hotels and Food Services kept the highest number of workers at 121 per $1 million.
While this federal loan program ended in late June, there is considerable concern about extending or restarting the program. Even with $130 billion left in remaining funds, businesses are beginning to feel the squeeze the more prolonged the US keeps its doors closed.