WNY brothers plead guilty to COVID Paycheck Loan Scheme fraud

BUFFALO, N.Y. (WIVB) – Two Buffalo-area brothers face serious prison sentences after pleading guilty to defrauding banks to obtain multiple federal loans aimed at helping businesses deal with the COVID-19 pandemic to help, the office of US Attorney Trini E. Ross announced on Friday.

Lancaster resident Larry Jordan, 45, and Sutukh El, a 41-year-old Buffalo resident also known as Curtis Jordan, Hugo Hurt or Hugo Hermes Hurtington, pleaded guilty to conspiracy to commit bank and wire fraud, which the U.S -Prosecutors confirmed the maximum penalty is 30 years in prison and a $1 million fine. Jordan also pleaded guilty to charges of bank fraud and engaging in monetary transactions involving property obtained by crime, which together could result in a maximum of 40 years being added to his sentence. Her sentencing is scheduled for January 2024.

According to court documents, the brothers conspired to complete fraudulent applications for eight Paycheck Protection Program loans between April and September 2020 on behalf of companies they owned or controlled. The PPP loans were funded by the CARES Act passed by Congress in 2020 in response to the COVID-19 pandemic.

In the applications, Jordan and El exaggerated their companies’ 2019 payroll costs in order to receive PPP loans for which their companies would not have been eligible. To support the payroll claims, the brothers submitted fake IRS forms and payroll registers that purportedly identified the names, personal information, and salaries of the workers listed on the applications.

In a PPP application, Jordan and El stated that their company, 5 Stems Inc., employed 194 people in 2019 with an average monthly payroll of $242,133.33. This application, approved by Evolve Bank & Trust, resulted in the deposit of a $605,2000 PPP loan into one of El’s bank accounts. In reality, 5 Stems only had nine employees and paid everyone a total of about $57,380 for the entire year.

The U.S. Attorney’s Office said some of the fraudulently obtained funds were used for Jordan and El’s own investments, personal expenses and home improvements.

In addition to three applications submitted to Evolve, the brothers also submitted five PPP applications to Utah-based financial technology company Lendio.

Anyone with information about suspected COVID-19-related fraud can report it by calling the Department of Justice’s National Center for Disaster Fraud hotline at 866-720-5721 or by calling the Department of Justice’s National Center for Disaster Fraud hotline NCDF web complaint form.