Two Oregon men have pleaded guilty for their roles in a construction-related scheme to steal Paycheck Protection Program funds. Russell Anthony Schort, 39, of Myrtle Creek, Oregon, pleaded guilty to bank fraud and Andrew Aaron Lloyd, 51, of Lebanon, Oregon, pleaded guilty to bank fraud, money laundering and aggravated identity theft.
According to the U.S. Attorney's Office, on May 1, 2020, Lloyd submitted a PPP loan application under Schort's business name, Schort-Lee Construction, to U.S. Bank. Included in the loan application package was a false IRS form 944 listing 2019 wages paid of more than $3 million. The application also included a fake list of 56 employees and the wages purportedly paid to each employee.
Based on these false representations, U.S. Bank processed the PPP loan application, resulting in the disbursal of more than $600,000 into Schort's bank account. Three days later, Schort transferred $307,000 to Lloyd's bank account. Lloyd then used the funds to purchase securities through an online brokerage account.
According to court documents, this scheme was just one of several that Lloyd engineered starting in April 2020, when he began submitting loan applications using numerous business names and personally identifiable information of relatives and business associates without their consent.
In total, Lloyd submitted nine PPP loan applications, six of which were accepted, resulting in a payout of more than $3.4 million. Lloyd also applied for numerous Economic Injury Disaster Loans, of which one was accepted, resulting in an additional $160,000 in payments to Lloyd.
Upon receipt of the funds, Lloyd purchased real estate and invested in securities, investigators said. Lloyd transferred more than $1.8 million of the funds to his E*TRADE Securities brokerage account. Securities Lloyd purchased using the fraudulently acquired funds substantially increased in value.
In January 2021, agents seized Lloyd's brokerage account, which included 15,740 shares of Tesla, Inc. purchased with proceeds of his fraud. In March 2021, agents seized another account containing more than $660,000 in securities and cash. The securities and cash seized from Lloyd's accounts are presently valued at more than $11 million.
With Lloyd's acceptance of responsibility, the U.S. Attorney's Office said it will recommend a sentence of 61 months in federal prison. He has agreed to pay more than $3.6 million in restitution and to forfeit more than $11 million in cash and securities and 23 properties that were purchased with PPP funds.
As part of his plea agreement, Schort has agreed to pay no less than $294,552 in restitution and faces a maximum sentence of 30 years in prison, a $1 million fine and five years of supervised release. Lloyd will be sentenced on September 9 and Schort will be sentenced on October 21.