Rapper Diamond Blue Smith, a member of Pretty Ricky, and a Pennsylvania towing company owner have been charged and accused of participating in a scheme to file fraudulent loan applications seeking more than $24 million in forgivable Paycheck Protection Program loans.
The loans were guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Smith, 36, of Miramar, Florida, and Tonye C. Johnson, 28, of Flourtown, Pennsylvania, were charged in federal criminal complaints filed in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud, according to a release from the U.S. Attorneys, Southern District of Florida.
Smith was arrested and appeared Thursday before U.S. Magistrate Judge Regina D. Cannon of the Northern District of Georgia. Johnson was arrested Oct. 1 and appeared Oct. 2 before U.S. Magistrate Judge Henry S. Perkin of the Eastern District of Pennsylvania.
The criminal complaint against Smith alleges that he obtained a PPP loan of $426,717 for his company, Throwbackjersey.com LLC, using falsified documents. Upon completion of that loan, Smith then sought and obtained another PPP loan of $708,065 for his other company, Blue Star Records LLC, using falsified documents. Smith then purchased a Ferrari for $96,000 and made other luxury purchases using PPP loan proceeds.
Authorities seized the Ferrari at the time of Smith’s arrest. He also withdrew $271,805 in loan proceeds. The complaint further alleges that Smith sought PPP loans on behalf of others in order to receive kickbacks for those confederates.
According to the complaints, Smith and Johnson conspired with others to obtain millions of dollars in fraudulent PPP loans. It is alleged that early in their scheme, Smith and Johnson’s co-conspirator, Phillip J. Augustin, obtained a fraudulent PPP loan for his talent management company using falsified documents.
The complaints allege that the scheme involved the preparation of at least 90 fraudulent applications, most of which were submitted.
Smith and Johnson’s cases were investigated by agencies in Miami, Cleveland and Philadelphia.
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