North Central CT Contractor Charged In $100K Covid Relief Fraud Case

COVENTRY/VERNON, CT — A north central Connecticut-based contractor has been charged in a federal Covid-19 relief funds case.

Vanessa Roberts Avery, United States attorney for the District of Connecticut; Jean Pierre Njock, acting special agent in charge of the New Haven Division of the Federal Bureau of Investigation; and Joleen D. Simpson, special agent in charge of the IRS Criminal Investigation unit in New England, made the announcement together Tuesday. They said that John Matava, 58, of Coventry, has been charged via a federal criminal complaint with offenses related to his receipt of Covid-19 relief funds.

Matava was arrested Saturday and appeared Monday before U.S. Magistrate Judge Thomas O. Farrish in Hartford and was released on a $60,000 bond.

Authorities said the case is related to the Coronavirus Aid, Relief, and Economic Security (or CARES) Act. CARES funding was designed to provide emergency financial assistance to Americans "suffering the economic effects caused by the COVID-19 pandemic."

One source of relief provided by the CARES Act was the authorization of forgivable loans to small businesses for job retention and certain other expenses through the CARES Paycheck Protection Program, authorities said. The program allowed qualifying small businesses and other organizations to receive unsecured loans at an interest rate of 1 percent and the money was to be used by businesses on payroll costs, interest on mortgages, rent and utilities. The PPP allowed the interest and principal to be forgiven if businesses spent the proceeds on those expenses within a certain period of time and used at least a certain percentage of the amount to be forgiven for payroll purposes, authorities said.

The PPP was overseen by the Small Business Administration, which has authority over all PPP loans. Individual PPP loans, however, were issued by private approved lenders, such as Celtic Bank, Avery said. In April 2020, Matava applied for a $100,000 PPP loan for Vernon-based J.M. Builders LLC, case records show.

According to case records, the loan application included several "false representations," including that J.M. Builders LLC had eight employees and an average monthly payroll of $40,000; that the monies would be used for payroll, lease, mortgage, interest and utilities; and that the business owner was not subject to pending formal criminal charges. At the time of the PPP loan application, there were no records of payroll or employees with the Connecticut Department of Labor for J.M. Builders LLC, and Matava was subject to criminal charges in two pending cases related to arrests in 2017 and 2018. Records show that, on Jan. 4, 2018, Matava was accused of soliciting work despite an expired contractor's license along with skipping out on that work at rental properties in the Rockville section of Vernon, according to an arrest warrant.

Prosecutors said that, on April 22, 2020, Celtic Bank disbursed $100,000 to a bank account for J.M. Builders LLC on which Matava was the signatory. The account was opened on April 21, 2020, and had a balance of zero dollars immediately prior to the loan funds being disbursed, case records show. Between April 2020 and January 2021, Matava used the funds primarily for personal expenditures, including $3,498 to pay a dog breeder, $4,777 for payments to an RV superstore in Connecticut, and legal fees that included a $2,000 retainer for four cases at Rockville Superior Court, Avery said.

Avery said Matava is also accused of seeking $100,000 in additional PPP funds from Celtic Bank in 2021, and included with the application were "additional false statements and fraudulent tax documents." Celtic Bank denied the application, Avery said.

The federal complaint charges Matava with wire fraud affecting a financial institution, which carries a maximum prison term of 30 years and with making an illegal monetary transaction, which carries a maximum term of 10 years.