NEWARK, NJ – A Warren County, New Jersey businessman admitted today that he fraudulently obtained nearly $1.8 million in federal loans from the Paycheck Protection Program (PPP), United States Attorney Philip R. Sellinger and Attorney General Deputy Kenneth A. Polite Jr. of the Department of Criminal Justice Division announced.
Rocco A. Malanga, 50, formerly of Hackettstown, New Jersey, pleaded guilty via videoconference before U.S. District Judge Julien X. Neals to information charging him with one count of bank fraud and one count of money laundering .
According to documents filed in the case and statements made in court:
From April 2020 through August 2020, Malanga submitted false documentation to three lenders to fraudulently obtain approximately $1.8 million in federal COVID-19 emergency relief funds for struggling small businesses. You submitted at least three PPP loan applications on behalf of three different business entities where you fabricated the number of employees employed by each business entity as well as their average monthly payroll. Malanga then diverted some of the loan proceeds to finance a business that did not receive PPP loan funds.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and other expenses through the PPP. In April 2020, Congress authorized more than $300 billion in additional PPP funding.
The PPP allowed small businesses and other qualified organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must have used PPP loan funds for payroll costs, interest on mortgages, rent, and utilities. The PPP allowed interest and principal to be forgiven if businesses spent the proceeds on these expenses within a set period of time and used at least a certain percentage of the loan for payroll expenses.
The bank fraud charge carries a maximum sentence of 30 years in prison and a $1 million fine; the money laundering charge carries a maximum sentence of 10 years and a fine of $250,000. Sentencing is scheduled for November 2, 2022.
US Attorney Sellinger and Deputy Attorney General Polite accredited IRS Special Agents – Criminal Investigation, under the direction of Acting Special Agent in Charge Tammy L. Tomlins; postal inspectors from the United States Postal Inspection Service in Newark, under the direction of Inspector-in-Charge Damon Wood; special agents from the Office of the Inspector General for the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, under the direction of Acting Special Agent in Charge Stephen Donnelly; special agents of the Federal Deposit Insurance Corporation, Office of the Inspector General, under the direction of Special Agent in Charge Patricia Tarasca, New York Region; and special agents from the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Sharon MacDermott, whose investigation led to today’s guilty plea.
The government is represented by Assistant United States Attorney Blake Coppotelli of the District of New Jersey and Trial Attorney Della Sentilles of the Justice Department’s Fraud Section.