MINNEAPOLIS – A St. Paul man has pleaded guilty to fraud, money laundering, and aggravated identity theft in connection to a more than $840,000 covid-relief fraud scheme, announced Acting U.S. Attorney Charles J. Kovats.
According to court documents, Kyle William Brenizer, 33, was the owner and manager of True-Cut Construction LLC (“True-Cut”), a contracting and construction company located in Brooklyn Park. In August 2018, True-Cut and Brenizer were ordered by the Minnesota Department of Labor and Industry to cease and desist from doing business. In December 2019, True-Cut’s contractor license expired and was never renewed.
According to court documents, on May 1, 2020, Brenizer submitted a false and misleading Paycheck Protection Program (PPP) application in the name of True-Cut seeking approximately $841,000, but the application was denied. On May 12, 2020, Brenizer again submitted a false and misleading PPP application in the name of True-Cut seeking approximately $841,000 in PPP funds. This time, in order to conceal his role in submitting a fraudulent application , Brenizer submitted the application under the name of another individual whom Brenizer falsely claimed was the 90 percent owner of True-Cut. Brenizer further falsely stated that True-Cut’s average monthly payroll was $336,400 for approximately 30 employees. In support of both loan applications, Brenizer caused to be submitted to the lender fraudulent supporting documentation, such as falsified bank statements and IRS documents. In addition, Brenizer falsely certified that he was not subject to any pending criminal charges even though he was named in multiple felony charges pending in the State of Minnesota for such charges as check forgery, identify theft, and theft by swindle. Due to these various misrepresentations and omissions, on May 13, 2020, Brenizer’s second application was approved, and he received $841,000 in PPP funds.
According to court documents, instead of using the PPP funds for authorized business expenses, such as payroll, Brenizer transferred approximately $650,000 to a bank account unrelated to True-Cut and made a $29,000 payment to purchase a Harley-Davidson motorcycle, among other impermissible expenditures and transactions.
Brenizer pleaded guilty earlier today before U.S. District Judge Eric C. Tostrud to one count of wire fraud, one count of money laundering, and one count of aggravated identity theft. A sentencing hearing will be scheduled for a later date.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.
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 Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
This case is the result of an investigation conducted by IRS – Criminal Investigations, the FBI, the Federal Deposit Insurance Corporation – Office of Inspector General, and the Small Business Administration – Office of Inspector General.
Assistant U.S. Attorneys Matthew S. Ebert and Allison K. Ethen are prosecuting the case.