A New York City correction official, eight Police Department employees and eight other current and former city and state workers schemed to defraud Covid relief programs that were intended to provide money to struggling business owners, the authorities said on Wednesday.
The defendants submitted phony applications for disaster relief loans on behalf of hair and nail salons and day care programs that did not exist, federal prosecutors in Manhattan said. The prosecutors said many defendants spent the proceeds of their loans on personal expenses, like casino gambling, stocks, furniture and luxury clothing.
They collectively stole more than $1.5 million from the federal Small Business Administration and financial institutions that issued guaranteed loans, and the intent was to steal hundreds of thousands of dollars more, the prosecutors said.
The defendants charged in the case also included employees of the city’s Human Resources Administration, Department of Transportation, Administration for Children’s Services and Department of Education as well as the state Metropolitan Transportation Authority.
“Scheming to steal government funds intended to help small businesses weather a national emergency is offensive,” Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement. “As public employees, these folks should have known better.”
The case is being prosecuted by the office’s public corruption unit.
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