Orange County Man, William Nicoloff Sentenced to 2½ Years in Federal Prison for Fraudulently Obtaining $1.5 Million in COVID-Relief Loans
(STL.News) An Orange County man was sentenced today to 30 months in federal prison for fraudulently obtaining more than $1.5 million in Paycheck Protection Program (PPP) COVID-relief loans that he used for personal expenses and stock market trading.
William Nicoloff Jr., 51, of Mission Viejo, was sentenced by United States District Judge James V. Selna, who also ordered him to pay $1,554,063 in restitution. At today’s hearing, Judge Selna said Nicoloff’s conduct was “extremely troubling” because it “pervert[ed] a public program designed to help small businesses during a time of severe economic hardship.”
Nicoloff pleaded guilty in April 2021 to one count of bank fraud and one count of conducting an unlawful monetary transaction.
From April 2020 to June 2020, Nicoloff obtained six PPP loans by defrauding two banks. To obtain the loans, he submitted to the banks false documents on behalf of four companies he owned and controlled – including Stonecreek Capital Partners and David Capital LLC – as well as himself and another individual. The fraudulent documents included falsified bank records, phony lease agreements, altered incorporation records, fake IRS records and bogus employee information.
On the loan applications, Nicoloff falsely certified the number of employees and average monthly payrolls of the applicant companies and falsely claimed Nicoloff did not own other businesses.
Nicoloff also falsely represented that the PPP funds would be used to pay employees and other permissible business expenses, when, in fact, he intended to use and later used the PPP loan proceeds to fund personal living expenses and securities trading activity entirely unrelated to the businesses for which the PPP loans were obtained.
In total, Nicoloff fraudulently obtained $1,554,054 in PPP loans.
Nicoloff transferred $405,880 in proceeds from the David Capital loan to a separate brokerage account and engaged in securities trading as well as using some of the loan to pay off personal expenses. Nicoloff has agreed to forfeit $1,709,151, which includes the $1,554,063 he obtained from the PPP loans as well as $155,097 in proceeds he gained because of securities trading from the illicit loans. These funds were previously recovered by the government from seizures of Nicoloff’s accounts.
The Federal Reserve Board – Office of Inspector General; the U.S. Treasury Inspector General for Tax Administration; IRS Criminal Investigation; and the Small Business Administration – Office of Inspector General investigated this matter.
Assistant United States Attorney Scott Paetty of the Major Frauds Section prosecuted this case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.
The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.