Federal prosecutors filed a criminal complaint last Friday against a Florida-based businessman, alleging that he fraudulently obtained close to $4 million from a government-sponsored coronavirus relief program.
David Tyler Hines controlled four South Florida-based moving companies that he used to fraudulently apply for approximately $13.5 million in small business loans as part of the Paycheck Protection Program (PPP), according to U.S. prosecutors. The four companies are:
- Unified Relocation Solutions, LLC
- Promaster Movers, Inc (Inactive)
- Cash in Holdings LLC
- JB Hunt Movers LLC (formerly known as We-Pack Moving LLC)
In his applications for PPP loans, Hines cited the need to pay employees as the reason for the loans. However, federal authorities found that the “purported employees either did not exist or earned a fraction of what Hines claimed on the PPP applications,” according to an affidavit written by Bryan Masmela, a U.S. Postal Inspector.
In total, Hines received over $3.9 million in PPP loans from one lender. Instead of using the loans to pay employees, Hines spent the money on personal expenses, including a 2020 Lamborghini Huracán valued at over $300,000, according to the complaint. The Lamborghini, along with $3.4 million held in bank accounts, were seized at the time of arrest.
The Paycheck Protection Program and Covid-19 Relief Fraud
The PPP was included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act — which was signed into law on Mar. 27, 2020 — providing up to $669 billion in forgivable loans to small businesses. To obtain a PPP loan, small businesses must submit an application to an approved lender and provide information on legal name, average monthly payroll, number of employees, and the purpose of the loan, among other details. To be fully forgiven, the loans must be used for “payroll costs, interest on mortgages, rent, and utilities,” and at least 60 percent must be used for payroll, according to the Small Business Administration.
The case of David Hines is the latest in a string of fraud investigations related to COVID-19 relief. Hines’s modus operandi also aligns with that of other recent fraud schemes related to PPP loans, namely, the use of fraudulent applications to secure loans from lenders.
In June, federal prosecutors indicted Fahad Shah, the owner of a Texas-based wedding planning company, for his role in allegedly seeking more than $3 million in PPP loans by submitting fraudulent applications to two lenders. And on July 21, prosecutors charged Mukund Mohan, a Washington-based tech executive, with wire fraud and money laundering after he allegedly filed fraudulent applications requesting over $5.5 million in PPP relief.
Companies With Several Trade Names
Florida corporate records show that two of Hines’s companies — one of which was not identified in the complaint — have several registered trade names, also known as fictitious names. To mitigate the risk of doing business with individuals suspected of fraudulent activity, it is crucial to identify relationships between trade names and the legal entities they are associated with, and to unmask who ultimately owns and controls the legal entities.
Unified Relocation Solutions, LLC, one of the companies that Hines used to apply for a PPP loan, has seven registered fictitious names.
Fig. 1: A screenshot from Sayari Graph showing the controllers and fictitious names associated with Unified Relocation Solutions, LLC. While not listed in the graphic, Unified Relocation Solutions, LLC has one additional fictitious name — Federal Relocation Services.
We identified a fifth company controlled by Hines — Federal Relocation Company LLC. The company also lists two fictitious names: RW Movers and WP Moving.
A related party linked to one of Hines’s companies appears on an additional moving company in South Florida. She is also on the board of a Venezuela-based company that purportedly sells car parts.
Georgette Pomposo, the co-manager of Unified Relocation Solutions, LLC, is the manager and registered agent of US Transport Movers LLC in Miami. As of January 2014, she was also listed as the 20 percent shareholder and vice president of the board of directors of Y & P Corporación Industrial, C.A. The company is based in the coastal municipality of Girardot, in the Venezuelan state of Aragua, according to corporate records from the Venezuelan Contractors Registry.
It is unclear if Federal Relocation Company LLC or US Transport Movers LLC ever applied for a PPP loan. As of this writing, neither company appears in the government PPP loan database for small businesses that received more than $150,000.