A Marietta man is being charged in connection with a massive fraud scheme related to the Paycheck Protection Program that was part of the United States’ COVID-19 relief program.
Carl Delano Torjagbo, who is also known as Karl Lucius Delano, has been arrested on federal bank fraud and money laundering charges arising from a scheme to defraud a bank by obtaining a $9.5 million Paycheck Protection Program loan in the name of a fictitious company and then allegedly using the loan proceeds to upgrade his personal lifestyle.
The PPP is a federal loan program intended to help small businesses survive the COVID-19 pandemic by providing them with funds to cover certain payroll costs, including benefits, interest on mortgages, rent, and utilities.
“This defendant allegedly stole millions of dollars in taxpayer money intended to help small businesses stay afloat during the pandemic,” said U.S. Attorney Ryan K. Buchanan. “We will continue to investigate and charge anyone who fraudulently obtains these critical funds and uses them for their own personal gain.”
“The FBI and our partners will not tolerate anyone who misdirects federal emergency assistance intended for business who actually need it to stay operational,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “Torjagbo’s fraud was particularly egregious, and we will make sure he is held accountable accordingly.”
According to U.S. Attorney Buchanan, the charges, and other information presented in court, on February 16, 2021, Torjagbo signed a PPP loan application on behalf of Kremkov Industries LLC and submitted it to a bank, requesting a PPP loan in the amount of $9,554,425. To be eligible for a PPP loan, a business had to have been in operation on February 15, 2020.
According to prosecutors, Kremkov Industries was not eligible for a PPP loan because it was not in operation on February 15, 2020. In fact, prosecutors say it was not even created until approximately ten months after that deadline had expired.
Prosecutors say Torjagbo swore that the information he provided in the PPP loan application and in all supporting documents and forms was “true and accurate in all material respects.” Torjagbo certified that Kremkov Industries was in operation on February 15, 2020. Torjagbo stated that Kremkov Industries had 493 employees.
According to prosecutors, Torjagbo also stated that Kremkov Industries had an average monthly payroll of about $3.8 million. All of these statements were allegedly false.
In support of the PPP loan application, Torjagbo allegedly submitted fraudulent documents to the bank, including false tax returns and fake reports that listed the names and make-believe payroll information of the 493 people who purportedly worked for Kremkov Industries.
On March 29, 2021, as a result of Torjagbo’s alleged false and fraudulent representations, the bank transferred more than $9.5 million in PPP loan proceeds to Torjagbo’s custody and control. The PPP loan proceeds were initially deposited into a bank account titled in the name of Kremkov Industries. Immediately before that deposit, the balance in that account was only $105.
On the PPP loan application, Torjagbo certified that all loan proceeds would be used only for business-related purposes as specified in the loan application and consistent with the Paycheck Protection Program Rules. Torjagbo acknowledged that he could be prosecuted if the PPP loan proceeds were knowingly used for unauthorized purposes.
According to the Department of Justice, on April 8, 2021, Torjagbo caused $3 million of the PPP loan proceeds to be transferred by check from the bank to a different bank. On that check, Torjagbo wrote a note stating that it was for “payroll.” But those funds were not used to pay “payroll.” Instead, those funds were allegedly used to pay Torjagbo’s personal debts and expenses, including the following:
• $1,677,861.01 for his personal residence;
• more than $837,000 for tractor-trailers to start a new trucking business;
• approximately $300,000 to purchase other real estate;
• $118,299.79 for a 2022 BMW M850XL;
• $87,020 for a 2021 Land Rover Velar; and
• more than $15,000 for plastic surgery.
The PPP is a federal loan program intended to help small businesses survive the COVID-19 pandemic by providing them with funds to cover certain payroll costs, including benefits, interest on mortgages, rent, and utilities.
Torjagbo was arraigned before U.S. Magistrate Judge Linda T. Walker, on federal charges of bank fraud and money laundering, and was remanded to custody. Torjagbo was indicted by a federal grand jury on May 10.
Members of the public are reminded that the indictment only contains charges. The accused is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Federal Bureau of Investigation, U.S. Treasury Inspector General for Tax Administration, and Internal Revenue Service Criminal Investigation. In addition, the Federal Motor Carrier Safety Administration and the Paulding County Sheriff’s Office provided valuable assistance in the investigation.
Assistant U.S. Attorney Russell Phillips is prosecuting the case.
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