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U.S. attorney: ‘Multiple ongoing’ probes under way

In 2020, Joshua Leavitt and Pierre Rogers applied for at least $5 million in federal pandemic funds to help seven businesses. They were indicted for bank fraud at the end of June 2022.

In August 2021, the U.S. attorney’s office in New Hampshire charged Michael Rosa and George Adyns for fraud related to two companies. Adyns pleaded guilty in May.

In December 2021, Andrew Mc-Breairty pleaded guilty to abusing CARES Act funds. He was sentenced in April. These cases — as well a fourth, involving an employee’s embezzlement of Paycheck Protection Program funds from a business — are the only so far prosecuted in New Hampshire, a small part of the 1,200 indictments, 950 arrests and 450 convictions related to pandemic fraud nationwide.

But more are coming, both locally and nationally.

“We have multiple ongoing investigations,” said Alex Chen, special assistant in the U.S. attorney’s office in New Hampshire, who handles white-collar crime prosecution. “I see an uptick in prosecutions nationwide and in this district.”

Going after pandemic-related fraud “is a priority for our whole office. We will continue to aggressively pursue individuals that steal this money,” echoed U.S. Attorney Jane E Young, who heads the Concord office.

Nationally, there are nearly 400 ongoing investigations into pandemic business assistance funds as well as 1,150 investigations, if you count such alleged crimes like unemployment fraud. The national Pandemic Response Accountability Committee (PRAC), created in the CARES Act to oversee some $5 trillion in relief funds, is coordinating much of the activity, with 43 criminal investigators from 13 inspector general offices.

The Office of Inspector General (OIG) says it has 70 investigators looking into it.

PRAC, the OIG and U.S. attorney offices across the country are using tools such as artificial intelligence and machine learning to sift through massive databases. They are looking not only for suspicious loan data, such as multiple businesses with the same addresses, phones or Social Security numbers, but to cross-check them against larger data pools from agencies like the Internal Revenue Service.

No one is exactly sure how much pandemic fund fraud is out there. One NBC report said it could be as high as 10 percent of the nearly $800 billion in forgivable loan funds doled out. In recent testimony before Congress, Inspector General Hannibal “Mike” Ware said his office has identified “tens of billions of dollars” of suspicious loans, portending “a massive theft of taxpayer funds,” adding, “we have nowhere near a full understanding of the fraud landscape.”

Already, 66,000 pandemic relief loans have been defaulted, and about 1.2 million PPP borrowers have not requested loan forgiveness. “Needless to say, these are highly suspicious and require focus and scrutiny,” Ware told the House Oversight Committee in June.

However large the fraud landscape is, the actual number of indictments so far has been minuscule. In New Hampshire, for instance, the four PPP prosecutions represent one one-hundredth of a percent of the 41,000 PPP loans issued, similar to the ratio nationally. And though there have been cases of largescale fraud — one criminal ring in Miami allegedly stole $24 million — most of the cases involved much smaller amounts.

Leavitt and Rogers

In New Hampshire, the biggest indictment — at least when it came to the size of the fraud — was against the aforementioned Leavitt and Rogers, who allegedly applied for 14 forgivable PPP loans totaling $2 million from TD Bank, with tax returns that were either never filed or they overstated the company’s various payrolls.

The two also got a dozen loans and advances totaling $3 million through the Small Business Administration’s Economic Injury Disaster Loan program.

And Rogers also withdrew $107,800 from the company’s funds to buy a 2011 Rolls-Royce.

Chen would not comment on specific investigations.

Leavitt, 40, of Northwood, politely declined comment on the advice of his attorney, whereas Rogers, 43, formerly of Bedford, and his attorney didn’t return numerous phone calls and emails.

Leavitt’s attorney, Brian Quirk — who also represented Adyns and McBreairty — would only speak in the most general terms about the increase in prosecutions in general terms.

“The global pandemic created some extremely difficult times for businesses,” he said. “Every case is a unique story.

Everyone deserves to be treated fairly. It is important to have good representation to navigate through this difficult process.”

Some more information can be gleaned from the indictment and the public record.

Both Leavitt and Rogers claim to have worked together in Alumni Ventures, an expanding Manchester venture capitalist group, that in May signed a long-term lease to rent 27,000 square feet in the Manchester Millyard. Rogers said he was a senior director (though in one filing said he was head of intermediary distribution), and Leavitt said he was senior vice president of finance and operations.

Leavitt and Rogers’ biggest venture was PuroTrader, an online cigar auction and trading company, which later evolved into Yahyn, an ancient Hebrew word for wine, which, according to the company website, allows wine buyers to “choose from its massive inventory aggregator and find the bottle that is most ideally suited to their preferences (based on a proprietary scientific method that correctly predicts taste).”

“Yahyn is aiming to positively disrupt the way wine is purchased, distributed and consumed,” summed up a Yahyn 2020 annual report filed with the U.S. Securities and Exchange Commission.

PuroTrader was incorporated in May 2019. According to the annual report, it had a dozen employees in 2020. Rogers owned just under 50 percent of the shares. Leavitt isn’t mentioned as a shareholder, but the company owed him $175,000. The company’s total assets totaled $56,000, with only $17,300 in cash, and total liabilities were $1.3 million. In 2020, revenues were $43,000 and the company posted a net loss of $1.6 million.

The two created Puro Group in November 2019 and Puro Lounge in December.

PuroTrader received a $132,756 PPP loan in on April 14, 2020, Puro Lounge got one for $100,000 on April 27, and Puro Group received $175,000 in PPP funding on May 6, according to the indictment. (Puro Group is also a $128,000 creditor of PuroTrader/Yahyn.)

Leavitt, chief financial officer of Puro/ Yahyn, and a self-described serial entrepreneur, also formed Dark Matter Associates in February 2019, which is in the business of “management of companies and enterprises.” Dark Matter received $30,000 in PPP loans, and in April 2020 tried to form Demeter Project — for the management of companies and enterprises in July — but the NH secretary of state rejected it, probably because it is the same name of an international organization that promotes sustainable agriculture. In any case, the company was awarded $34,667 in PPP loans the day before that SOS filing.

Leavitt also obtained an EIDL grant and loan for Monticello Transnational. Monticello is identified as a “payment processing partner” on the PuroTrader website.

In its secretary of state filing, it described itself as an “e-commerce cart service … that consults on offshore solutions to banking and corporate structure needs.”

Rogers’ Sunju, another management company originally formed in 2013, got $175,000 in PPP loans in July 2020.

Rogers got his degree in international economics from Hawaii Pacific University, according to a brief biography at the start of an interview posted online by Authority Magazine, entitled “5 things I wish someone told me before I became CEO of Yahyn.”

Rogers described himself as “cursed” to be born an entrepreneur. “I wasn’t suited to work in a rigid corporate structure … I wasn’t going to be kissing up to my boss.”

Startups are “challenging, stressful, and you encounter a high degree of failure,” he added.

But, he said, he learned, that “doing the right thing matters.” When describing how he would bring “goodness to the world” he said he would like to educate kids. “I want to teach them how to be successful without veering to the dark path.”

Rogers was arrested in Hawaii on June 30, though both Rogers and Leavitt are out on bail.

Rosa and Adyns

Michael Rosa, 61, of Salem, also describes himself on LinkedIn as a “serial entrepreneur” as well as an “angel investor, bitcoin investor, a cleantech specialist, a climate care advocate and a wine enthusiast.”

Rosa, along with George Adyns, 51, of Sandown, allegedly ripped off the unemployment system. But only Adyns is charged with fraudulently obtaining some $50,000 in PPP and EIDL loans, for KSC Industrial, a Plaistow company that produces hazardous waste containers.

In this case, the two crimes are related because one of the alleged misrepresentations on the PPP application was that the company wasn’t engaged in illegal activity. However, since unemployment fraud is illegal, so was the PPP application, according to the indictment.

The indictment also cited other problems with the PPP application. For one, Rosa was disbarred from government contracting because his previous company, Enco, was fined $83,717 for making false statements to the U.S. Defense Logistics Agency because the hazardous material mats it was supplying were not up to standard.

Rosa then “lured” Adyns in as his CFO for KSC and Enviromart, a company he had invested in and purchased in 2016, according to an SEC filing. Enviromart, which also produced hazardous waste containers used to clean up Superfund sites, employed 10 people at the end of 2015, but the company had received a notice of disbarment in 2014 because Rosa was a significant shareholder. The company’s appeal was denied.

At the end of 2015, Enviromart had less than $17,000 in cash, $529,502 in assets and an accumulated deficit of $2.1 million. The company did have nearly $2.3 million in revenue that year, but posted a net loss of $587,000. Those are some of the reasons the company had “substantial doubt” that it could continue as a going concern, according to the SEC filing.

Enviromart rented office and warehouse space from Rosa, and sold $355,000 in materials to Enco Industries, which was also controlled by Rosa. Both companies were located at the same Plaistow location, as was KSC Industrial.

KSC was formed in 2019. When the pandemic hit, both defendants allegedly directed the employees of both companies to file unemployment claims even though they continued working there.

“The defendants defrauded the United States and (the NH Department of Employment Security), which effectively paid their employee salaries.”

The indictment said that Adyns listed another employee as the owner of KSC, and signed that person’s name to PPP and EIDL applications for $135,193.82 without the person’s knowledge. Adyns did not disclose that Rosa managed both KSC and Enviromart, or that Rosa had “de facto ownership” of KSC.

Adyns pleaded guilty to two counts.

First, he agreed that Enviromart and KSC were “functionally the same company,” and that he, along with Rosa, directed the unemployment scheme, and therefore knew the company was participating in illegal activity. There was nothing in the plea about his alleged knowledge of the disbarment or allegedly signing someone else’s name on the applications.

Adyns faces a maximum prison term of 20 years, but the U.S. will recommend a much lighter sentence. He still has to pay $49,486 to Employment Security, $39,593 to Cross River Bank (which provided the PPP loan) and $95,000 to the SBA for the EIDL loan. Adyns did not return inquiries.

The case against Rosa is ongoing. A trial has been set for Sept. 7. Rosa and his law yer also did not respond to inquiries.

McBreairty

The indictment against McBreairty, 45, didn’t mention his company. The SBA loan data listed him as being in the new car dealer industry. His LinkedIn page lists him as a transportation manager for a large logistics company as well as at C&S Wholesale Grocers in Keene where he lived. (He since has moved to Pennsylvania where he worked for a dealership.)

So car dealing appears to have been a sideline business.

According to the indictment, he inflated his income from that business on his PPP applications, and therefore misused $55,316 in CARE funds. Though he admitted to lying, his attorney, Quirk, pleaded in a sentencing memorandum that he had fallen on hard times because of the pandemic and was “extremely embarrassed and remorseful for what he did. Mr. Mc-Breairty had to disclose his conduct to his elderly parents and to his wife and children, which was painful and difficult.”

McBreairty was sentenced to two years’ probation (with six months’ home confinement), $55,000 in restitution: $33,000 to Key Bank, $22,000 to the SBA and a $5,000 fine.

Bob Sanders can be reached at bsanders@nhbr.com.



Pierre Rogers allegedly applied for 14 forgivable PPP loans totaling $2 million from TD Bank.




Josh Leavitt got a dozen loans and advances totaling $3 million through the SBA’s EIDL program.

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