Lee County man sentenced to prison for $118K COVID loan fraud

Diop McKenzie, a 30-year-old man from Cape Coral, was sentenced to 45 months in federal prison for bank fraud, wire fraud and aggravated identity theft after pleading guilty to charges in June. 

The court also ordered McKenzie to pay $117,832 of restitution to the Small Business Administration. The dollar amount was determined by the proceeds of the bank and wire fraud, according to a statement from the U.S.. Attorney's Office of the Middle District of Florida.

In May 2020, McKenzie, authorities contended, submitted a fraudulent Paycheck Protection Program application for a PPP loan totaling $20,832 through the SBA using the name of another person. 

McKenzie falsely represented that he had a business located in Cape Coral and stated in his application that the proceeds of the PPP loan would be used for payroll costs and rent for the business, officials say. The PPP loan was approved, but the investigation, performed in part by the Secret Service and Cape Coral Police Department, revealed that the loan proceeds were used for unauthorized purposes and for his own personal benefit.

In July 2020, McKenzie similarly submitted a fraudulent Economic Injury Disaster Loan (EIDL) application to the SBA for a $97,000 loan using the name of another individual and using the other person’s social security number, officials alleged. Further, McKenzie falsely reported the revenue for his purported business and the cost of goods sold for the previous year prior to Covid, officials say.

The investigation revealed that the individual listed on the application hadn’t applied for the EIDL loan fraudulently obtained in his name, nor had the individual received any funds from the loan.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 2020 that was designed to provide emergency financial assistance to Americans suffering the economic effects resulting from the pandemic. PPP loans were one source of relief provided by the CARES Act to help small businesses. 

The EIDL program was also created to provide economic relief to small businesses that were experiencing negative financial impacts due to the pandemic. If an applicant also obtained a loan under the PPP, the EIDL funds could not be used for the same purpose as the PPP funds.