MIL-OSI Security: Former Brooklyn Resident Pleads Guilty to $3 Million Tax Return and Covid-Relief Fraud Schemes

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Source: United States Attorneys General 9

Defendant Used Shell Companies to Falsely Generate Unearned Tax Refunds and Claim COVID-19 Emergency Relief Earmarked for Distressed Businesses

Earlier today, in federal court in Brooklyn, Patrick Poux pleaded guilty to filing false applications for hundreds of thousands of dollars in COVID-19 emergency relief loans in 2020 under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL).  Poux also pleaded guilty to fraudulently generating and submitting false tax return applications claiming millions of dollars in unearned tax refunds between 2016 and 2019.  Today’s proceeding was held before United States Magistrate Judge Robert M. Levy.  When sentenced, Poux faces up to 30 years in prison and a fine of up to $1 million.

Breon Peace, United States Attorney for the Eastern District of New York, and Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the guilty plea.

“It was money not well earned, or well spent. The defendant admitted to preparing and filing false applications for millions of dollars’ worth of COVID-19 disaster relief funds and tax refunds and then spending that money on a life coach and luxury goods,” stated United States Attorney Peace.  “This Office will vigorously prosecute individuals who steal taxpayer dollars, especially from critically important government programs designed to help struggling small businesses and families stay afloat during the pandemic.”

“Patrick Poux orchestrated an elaborate scheme to create false W-2 forms with excessively high federal withholdings, attempting to gain millions by using shell companies he controlled to get fraudulent tax refunds for him and his co-conspirators.  Poux’s fraud went on to include COVID-19 loan applications for companies that had no operations or employees,” said Special Agent in Charge Fattorusso.  “Poux lived a rich lifestyle filled with luxury goods while stealing hundreds of thousands of dollars from those who need the funds for their businesses to thrive. U.S. taxpayers have paid the bill for his lavish purchases for far too long, and today’s guilty plea ensures that Poux will soon pay it back by facing the consequences of his actions.”

The CARES Act was enacted on March 29, 2020 to provide emergency financial assistance in connection with economic effects of the COVID-19 pandemic.  One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for certain specified expenses, including payroll costs, interest on mortgages, rent, and utilities.  The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.  

Similarly, the EIDL program was a program that provided low-interest financing to small businesses, renters and homeowners in regions affected by declared disasters. The CARES Act authorized the SBA to provide EIDLs of up to $2,000,000 to eligible small businesses experiencing substantial financial disruption due to the COVID-19 pandemic.

As set forth in court filings, between March 2020 and September 2020, amid the COVID-19 pandemic, Poux fraudulently applied for PPP and EIDL loans and grants totaling approximately $320,000, on behalf of himself and corporate entities he controlled.  Poux received approximately $183,000 in COVID-19 relief loans and grants to which he was not entitled, and he spent those funds on personal expenses, including a life coach and luxury goods from stores such as Saks Fifth Avenue.

As also set forth in court filings, between 2016 and 2019, Poux and others used false wage and withholding information in income tax returns to obtain tax refunds to which they were not entitled.  To advance the scheme, Poux created false tax forms for shell companies that had no operations or employees.  He gave co-conspirators tax forms that falsely reported that the co-conspirator had worked at a shell company and had withheld income—even though the co-conspirator never worked at the shell company.  Using these falsified forms, co-conspirators could claim substantial refunds from the United States Internal Revenue Service (IRS).  In return, Poux received a percentage of such refunds.  Poux and others submitted approximately 250 claims seeking a total of approximately $2.8 million in tax refunds from the IRS.

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorney Adam Amir is in charge of the prosecution.

The Defendant:

PATRICK POUX
Age: 45
Snellville, GA

E.D.N.Y. Docket No. 22-CR-117 (BMC)

MIL Security OSI