California Man Pleads Guilty to Scamming $9M From COVID Relief Programs

A California man pleaded guilty to federal charges that said he scammed $9 million in COVID relief loans, some of which he gambled away, according to the United States Department of Justice (DOJ) on Tuesday.

Andrew Marnell, 41, of Los Angeles admitted to fraudulently obtaining seven Payroll Protection Program (PPP) loans that he acquired after making numerous false and misleading statements about corporations he controlled, according to court documents.

In the program applications, Marnell misrepresented companies' business operations and payroll expenses, often using aliases and altered documents including "bogus" federal tax filings and employee payroll records.

After obtaining money from his scheme, Marnell transferred millions of dollars in COVID relief loans to his brokerage accounts to make "risky stock market bets" and spent hundreds of thousands of dollars gambling including at a Las Vegas casino, according to the DOJ.

PPP loans were established by the Small Business Administration in March 2020 through the Coronavirus Aid, Relief and Economic Security Act to help companies with 500 employees or less as well as nonprofits and sole proprietors.

Bipartisan Members Of Congress Announce Coronavirus Relief
A Los Angeles plead guilty to federal charges that said he scammed $9 million in COVID relief loans. Senator Angus King, of Maine, sets up a sign alongside a bipartisan group of Democrat and Republican members of Congress as they announce a proposal for a COVID-19 relief bill on Capitol Hill on December 1, 2020, in Washington, D.C. Tasos Katopodis/Getty

Like the PPP loan, the CARES Act also provided funding through the Economic Injury Disaster Loan Programs (EIDL) to help aid businesses affected during the pandemic. Marnell also admitted to fraudulently obtaining $170,000 in EIDL loans.

He pleaded guilty to one count of bank fraud and one count of engaging in a monetary transaction involving criminal proceeds. The first charge carries a 30-year statutory maximum penalty and the second is 10 years, according to the DOJ.

In correlation with his plea deal, the Department of Justice said Marnell forfeited items related to the pilfered PPP loan funds including more than $1.54 million seized from several brokerage accounts, $319,298 in cash recovered from his residence, numerous electronic devices, a Rolex Oyster watch, a Range Rover and a Ducati motorcycle.

In addition to the possible 40 years he may spend behind bars, Marnell has agreed to pay restitution to the victim lenders to compensate for their losses. The amount is believed to be $7,341,376, according to the DOJ.

Marnell is scheduled to be sentenced on February 14, 2022, by United States District Judge R. Gary Klausner. Marnell has been in custody since his arrest in July 2020.

The Attorney General established the COVID-19 Fraud Enforcement Task Force in May 2021 to work with different agencies across the government to combat and prevent pandemic-related fraud, according to the DOJ.

"The Department of Justice will use every available federal tool—including criminal, civil, and administrative actions—to combat and prevent COVID-19 related fraud. We look forward to working with our federal government colleagues to bring to justice those who seek to profit unlawfully from the pandemic," wrote Attorney General Garland in a memo announcing the Task Force.