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Three charged in cocaine bust in Racine approved to receive PPP loans in 2020 and 2021

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RACINE — At least three of the men and women arrested Wednesday for alleged connections to cocaine dealing in the greater Racine area were approved to received federal business COVID-19 stimulus funds in 2020.

Of the 15 people arrested and criminally charged in connection to the alleged gang, at least three were approved to receive a total of at least $80,328 in loans through the Paycheck Protection Program.

At this time, however, it remains unclear if they will be prosecuted for receiving the loans, as the PPP money could have been part of a legal business venture. Prosecution has just begun into the alleged drug dealing, with federal charges having been filed on Wednesday.

According to online records:

  • Debra Urness, 42, of Racine, had a loan request of $20,833 approved in April 2021, but that money has not yet been disbursed.
  • Carl “Pops” Grayson, 64, of Racine, had a loan of $18,333 approved in August 2020 and that money was disbursed.
  • Marquan “Munch” Washington, of Racine, had two loans for $20,581 approved in April and May of this year, with the funds from the first loan being disbursed but not the second.

The industries their reported businesses were listed under include:

  • “All Other Business Support Services” for Washington
  • “All Other Personal Services” for Urness
  • “Catering” for Grayson.

All three businesses were listed as either a sole proprietorship or being a self-employed individual.

According to the Racine Police Department, following Wednesday’s arrests, nearly 4 pounds of cocaine, a third of a pound of crack cocaine, almost three pounds of marijuana and more than $60,000 in cash were recovered.

PPP

The PPP program was approved by Congress early in the COVID-19 pandemic. That program is now closed, but it has been credited for keeping potentially millions of small businesses afloat and thus protecting millions of jobs.

According to the U.S. Small Business Administration, more than $579.5 billion was disbursed through more than 7.67 million PPP payments have been made since the program began.

While the PPP funding came from the federal government, requests for the money were approved by banks and other lenders.

  • Grayson’s loan was approved by Kabbage Inc., an online-focused financial company based in Atlanta that is owned by American Express.
  • Washington’s loan was approved by Harvest Small Business Finance, LLC, a firm that reports it formed in 2016 and focused its work on disbursing PPP loans after they were announced. On the homepage of Harvest Small Business Finance’s website is an alert in red text reading “FRAUD ALERT! Anyone suspected of committing Fraud under the PPP Program will immediately be reported to the government agencies and prosecuted by law. Don’t do it, it’s not worth it!”
  • Urness’ loan was approved by Benworth Capital, a loaner that lists its business address as being in a hotel/condo building in Florida.

According to federalpay.org, a public resource site not affiliated with the government that tracked the releases of PPP loans, “the total PPP loan an eligible business or individual can receive is based on 2.5 times their average monthly 2019 payroll expenses, capped at $100,000 annually per employee.”

Concerns about the PPP program being abused have existed since the idea was proposed. The federal government was scrambling to keep businesses forced to shut down from closing outright, which led to banks and other loaners giving out money to fraudulent businesses.

The Department of Justice reported Wednesday that “Since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.”

In a phone interview Thursday, Rachel Apple, spokeswoman for the Wisconsin District Office of the U.S. Small Business Administration, said “The Department of Justice has already prosecuted quite a number of cases for people who have used for PPP funds … (for personal or criminal purposes) instead of for business purposes.”

She added in an email: “It is longstanding SBA policy to not comment on individual borrowers. In that, PPP was offered via lenders with delegated authority and the SBA guaranteed the loans made by these lenders … However, the lender’s approval does not reflect a determination by SBA that the borrower is eligible for a PPP loan or entitled to loan forgiveness. The SBA takes fraud seriously and all complaints are investigated and prosecuted to the full extent of the law.”

When The Journal Times asked if further prosecutions for fraud are coming, Kenneth Gales, spokesman for the U.S. Attorney’s Office of the Eastern District of Wisconsin, said in an email “we are not providing information beyond” previously shared information regarding the reported drug busts. “Consistent with U.S. DOJ policy, the U.S. Attorney’s Office does not comment on the status of criminal investigations.”

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