Monmouth County Man, Woman Charged In $3M CARES Act Scam

FARMINGDALE, NJ — A man and a woman who used to live in Monmouth County and now reside in Frisco, Texas were arrested Wednesday after federal prosecutors say they ran a massive $3 million Paycheck Protection Program fraud scheme.

Charged are Jean E. Rabbitt, 51, and Kevin Aguilar, 51, both formerly of Farmingdale.

Federal prosecutors say Rabbitt submitted fraudulent PPP loan applications on behalf of four businesses she owned.

IRS agents say she made fraudulent representations to the lenders, including a Federal Home Loan Bank member, and the Small Business Administration (SBA), including fraudulent payroll records and tax records and false certifications as to the number of employees and gross revenue of her businesses.

According to IRS records, none of the purported tax documents that Rabbitt submitted to the PPP lenders were, in fact, filed with the IRS.

Other government records showed that Rabbitt’s businesses had not in fact paid wages to any employees.

Based on Rabbitt’s alleged misrepresentations in the loan applications, Rabbitt’s businesses received approximately $3.33 million in federal COVID-19 emergency relief funds meant for distressed small businesses in the COVID pandemic and government shutdowns.

After Rabbitt’s businesses received the PPP loans through the fraudulent applications, Aguilar created sham payroll companies. Rabbitt then wrote checks from Rabbitt’s businesses to the sham payroll companies, falsely indicating on each check that the payments were for payroll. Rabbitt and Aguilar then transferred funds from the sham payroll companies to other companies that Aguilar created.

Federal prosecutors say Aguilar and Rabbitt then used the funds to purchase residential properties in Sherman, Texas, and to pay for personal expenses.

Both were charged with bank fraud, conspiracy and other charges. They are facing up to 30 years in prison. Both are scheduled to appear in federal court Thursday.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.