Maryland man sentenced for fraudulently obtaining more than $3.5 million in COVID-19 Cares Act loans

Date: Aug. 28, 2024

Contact: [email protected]

Used the proceeds to purchase property, a luxury vehicle and pay his personal expenses

Greenbelt, MD - The Honorable Deborah L. Boardman sentenced Rudolph Brooks Aug. 27 to 18 months in federal prison followed by two years of supervised release for fraudulently obtaining over $3.5 million in COVID-19 Coronavirus Aid, Relief, and Economic Security ("CARES") Act Payroll Protection Program (PPP) loans. The court also ordered Brooks to forfeit all property and assets derived from or obtained as a result of his criminal activity, including a 2018 Tesla Model 3, property located in Upper Marlboro, Maryland, and at least $2.2 million from 17 bank accounts controlled by Brooks.

The sentence was announced by Erek L. Barron, U.S. Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Kareem A. Carter of the Internal Revenue Service - Criminal Investigation (IRS-CI), Washington, D.C., Field Office; Special Agent in Charge, Jeffrey D. Pittano, of the Federal Deposit Insurance Corporation Office of Inspector General, Mid-Atlantic Region; Special Agent in Charge William J. DelBagno of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Amaleka McCall-Brathwaite, Eastern Region Investigations Division of the U.S. Small Business Administration Office of Inspector General (SBA OIG).

The CARES Act was enacted in March 2020 to provide emergency financial assistance to Americans suffering from the economic consequences of COVID-19. The CARES Act authorized forgivable loans to small businesses for employee retention and certain business expenses through PPP.

According to court documents, between April 2020 and September 2021, Brooks, who at times served as pastor at Kingdom Tabernacle of Restoration Ministries, participated in a scheme to fraudulently obtain PPP loans, used the loan proceeds for his personal enrichment, and concealed his misappropriation of the funds by laundering the loan proceeds. As stated in the plea agreement, Brooks used several entities to apply for PPP loans, including Cars Direct by Gavawn HWD Bob's Motors (Cars Direct), Kingdom Tabernacle of Restoration Ministries, and Madaro, LLC. In each case, Brooks grossly inflated the number of employees and average monthly payroll, and submitted fraudulent IRS Forms 940, Employer's Annual Federal Unemployment Tax Return, and other fraudulent IRS forms to support the loan applications.

For example, on May 12, 2020, Brooks received $1.5 million in fraudulently obtained PPP loan proceeds, deposited directly into a Cars Direct bank account on which Brooks was the sole signatory. He also received $1.8 million in fraudulently obtained PPP loan proceeds, deposited directly into a Kingdom Tabernacle bank account on which Brooks was the sole signatory. Similarly, on May 13, 2020, Brooks received $200,000 in such proceeds, deposited directly into a Madaro bank account in which Brooks was the sole signatory.

Brooks, of Cheltenham, admitted that he used the loan proceeds for his personal benefit and on payments and purchases not permissible under PPP, such as for a residence; for a luxury vehicle; and, for restaurant, retail store and grocery purchases. Brooks also made cash withdrawals and transfers to other accounts under his control. For example, Brooks opened a bank account in the name of Payroll by BJM, into which he transferred $500,000 of the Cars Direct PPP loan proceeds. Brooks also registered Payroll by BJM with the Maryland State Department of Assessments and Taxation, listing himself as "member" and sole signatory. Although the name Payroll by BJM created the appearance that the account was associated with a payroll company, there were no payroll or payroll-related expenses paid from this account.

In addition, Brooks initiated numerous transfers of PPP loan funds, totaling approximately $196,000, from the Cars Direct account to his personal bank accounts. Of this amount, Brooks wired $60,407 to Tesla Motors Inc. on July 30, 2020, to purchase a 2018 Tesla Model 3 in the name of Brooks' son, which was ultimately registered in Maryland in Brooks' own name.

On February 5, 2021, Brooks transferred $750,000 in proceeds from the Kingdom Tabernacle PPP loan to a bank account in the name of Madaro, for which Brooks was the sole signatory. On May 17, 2021, Brooks initiated a wire transfer of $500,000 to a title company to purchase property in Upper Marlboro, Maryland, in the name of "Rudolph Brooks."

The District of Maryland Strike Force is one of three strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The CARES Act was designed to provide emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic. The strike forces focus on large-scale, multistate pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.

For more information on the Department's response to the pandemic, please visit its website. Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form.

U.S. Attorney Barron commended CI, FDIC OIG, the FBI, and the SBA OIG for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorney Sean R. Delaney, who is prosecuting the case.

CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.

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