D.A. Vance: Investment Manager Charged for Multimillion-Dollar “PPP” Loan Scam


April 16, 2021

Manhattan District Attorney Cy Vance, Jr., today announced the Criminal Court arraignment of New York City-based investment manager GREGORY BLOTNICK, 33, for stealing more than $2.4 million from multiple lending institutions through Paycheck Protection Program (“PPP”) loan applications between April 2020 and August 2020. BLOTNICK is charged in a New York County Criminal Court complaint with multiple counts of Grand Larceny in the Second Degree and Criminal Possession of Stolen Property in the Second Degree, and one count of Scheme to Defraud in the First Degree.

“As alleged, Mr. Blotnick repeatedly took advantage of a system intended to provide lifelines to small businesses and their employees during the height of the COVID-19 pandemic,” said District Attorney Vance. “At a time when nearly 3,000 businesses were forced to close their doors across New York City, Mr. Blotnick diverted millions in vital PPP funds for his own personal gain. Our Office is committed to holding accountable anyone who criminally abuses the critical programs New Yorkers are relying on to get through crisis. If you know someone who has committed this type of fraud, we urge you to call us at (212) 335-8900.”

According to the complaint and statements made in court, beginning in April 2020, BLOTNICK applied for PPP loans at five lending institutions, misrepresenting the number of employees at each of his various companies and falsely certifying that the loan proceeds would be used to cover associated payroll costs. Based on those misrepresentations, BLOTNICK was awarded approximately $2.4 million in PPP loan proceeds. Contrary to BLOTNICK’s misrepresentations, financial and other records reveal that rather than being used to fund payroll for any employees, BLOTNICK diverted the vast majority of the PPP loan proceeds to his personal trading accounts and subsequently lost them in trading activity.

On April 30, 2020 BLOTNICK submitted a PPP loan application for Brattle Street GP LLC to Cross River Bank asserting and certifying that PPP loan proceeds would be used for Brattle Street GP LLC’s payroll. He also asserted that Brattle Street GP LLC had 25 employees on an average monthly payroll of $196,440. BLOTNICK requested a PPP loan in the amount of $491,100, which was then awarded by Cross River Bank and deposited into a Brattle Street GP LLC Chase business account. BLOTNICK then wired approximately $250,000 from Brattle Street GP’s Chase business account to one of his own Interactive Broker trading accounts. He then wired approximately $200,000 to an individual identified as a previous investor of BLOTNICK’s investment management firm.

On May 9, 2020, BLOTNICK submitted a PPP loan application for Brattle Street Capital LLC to TransPecos Bank. He asserted and certified that PPP loan proceeds would be used for Battle Street Capital LLC’s monthly average payroll of $154,840. BLOTNICK requested a PPP loan of $387,100, which was then awarded by TransPecos bank and deposited into a Brattle Street Capital LLC Chase business account on May 13, 2020. He then wired approximately $275,000 from Brattle Street Capital LLC’s Chase business account to his Interactive Broker trading accounts and wired approximately $104,165 to pay an online bill.

Between May 13 and May 15 2020, BLOTNICK purchased approximately $244,301 in securities through his Interactive Broker trading accounts.

Also in May, BLOTNICK submitted a PPP loan application for BSC Management LLC to Northeast Bank. He asserted and certified that PPP loan proceeds would be used for BSC Management LLC’s payroll. BLOTNICK also asserted that BSC Management LLC had 26 employees on payroll, with a monthly average of $182,339. He requested a PPP loan in the amount of $455,800, which was then awarded and deposited into Brattle Street Capital LLC’s First Republic Bank account. BLOTNICK wired approximately $440,000 from the Brattle Street Capital LLC First Republic Bank account to two of his Interactive Broker trading accounts. Approximately $15,000 was then wired to BLOTNICK’s personal account at Wells Fargo Bank. On May 29, 2020, BLOTNICK purchased approximately $265,580 in securities through his Interactive Broker trading accounts. 

On June 4, 2020, BLOTNICK submitted a PPP loan application for Brattle Street Capital LLC to American Express National Bank. BLOTNICK asserted and certified that PPP loan proceeds would be used for Brattle Street Capital LLC’s payroll, which he asserted was an average monthly payroll of $326,995 for 45 employees. He requested a PPP loan of $817,487.50, which was then awarded by American Express National Bank and deposited into Brattle Street Capital LLC’s First Republic Bank account on June 12, 2020. BLOTNICK then transferred approximately $816,000 to three of his Interactive Broker trading accounts and thereafter purchased approximately $686,542 in securities.

Finally, on August 4, 2020, BLOTNICK submitted a PPP loan application for Brattle Street GP LLC to Ponce Bank, asserting and certifying that PPP loan proceeds would be used for Brattle Street GP LLC’s payroll. BLOTNICK asserted that Brattle Street GP LLC had 16 employees on an average monthly payroll of $135,253. BLOTNICK requested a PPP loan in the amount of $338,132, which was awarded by Ponce Bank and deposited into BLOTNICK’s Ponce Bank account in the name of Brattle Street GP LLC. BLOTNICK then wired approximately $325,000 from his Ponce Bank account to the Brattle Street Capital LLC’s First Republic Bank account. He then wired approximately $225,000 of those funds to his Interactive Broker trading accounts.

Assistant D.A.s Daniel Poulos, Gabriel Hippolyte, and Bonnie Seok are handling the prosecution of the case under the supervision of Assistant D.A.s Steve Pilnyak, Principal Deputy of the Major Economic Crimes Bureau, and Julieta V. Lozano, Chief of the Major Economic Crimes Bureau, and Gloria Garcia, Deputy Chief of the Investigation Division and Executive Assistant D.A. Christopher Conroy, Chief of the Investigation Division. Senior Financial Investigator Joseph Dunn, Financial Intelligence Analyst David Cole, and Paralegals Benjamin Kobrin and Anna Kuritzkes provided analysis and assistance in the investigation. Senior Investigator Louis Capolupo and Investigator Rachel Dragos also assisted in the matter.

D.A. Vance thanked the Palm Beach County State Attorney’s Office, and in particular Assistant State Attorney Greg Kridos, and the West Palm Beach Police Department, specifically Detective Fernando Palacios, for the assistance and support they have provided with the investigation.

 

Defendant Information

GREGORY BLOTNICK

WEST PALM BEACH, FL

Charges:

  • Grand Larceny in the Second Degree, a class C felony, five counts
  • Criminal Possession of Stolen Property in the Second Degree, a class C felony, five counts
  • Scheme to Defraud in the First Degree, a class E felony, one count