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Brighton food-truck operator charged with pandemic-relief fraud; used federal grants aimed at keeping his business afloat to play the stock market, feds say

A Brighton man who operates Boston-area food trucks used more than $1.5 million in federal pandemic-relief funds to bet on the stock market, rather than on paying workers and other steps to keep his business afloat, the US Attorney's office charges, in a wire-fraud complaint filed in Boston federal court yesterday.

According to an affidavit by an FBI agent on the case, Loc Vo, 55, was granted money from the Economic Injury Disaster Loan program, the Paycheck Protection Program and the Restaurant Revitalization Fund for his Smart Gourmet company, based on his statements that Smart Gourmet recorded $1.6 million in gross receipts in 2019 and had about 20 employees. All three funds were meant to help small businesses survive the pandemic by giving recipients money to pay their business's bills and payroll. The restaurant fund, from which Vo got $967,000, was meant to help with general business costs but also restaurant-specific expenses, such as the cost of food, equipment and even outdoor seating.

But instead of putting the money into Smart Gourmet, the affidavit states, Vo promptly transferred most of the funds into E-Trade and Robinhood accounts that he then used to buy shares in biotech, Web and financial services, electric-car and gaming companies.

In addition to the loans and grants to Smart Gourmet, the affidavit states, Vo also got a PPP grant for a Virginian company that he claimed had 14 employees, even though it went defunct in 2002, according to the affidavit, which states that when he got that money, he transferred it to a Smart Gourmet account.

As one example of what he did, the affidavit states that on July 1, 2020, the SBA wired $149,900 in EIDL funds - meant to be working capital for his company - to Vo's Bank of America account. On July 3 and July 6, Vo transferred $143,000 to an E-Trade account. Later on July 6, the affidavit states, Vo used the E-Trade account to buy $115,000 worth of shares in a biotech company.

The affidavit states that when agents interviewed Vo in December, he told them many of the payments he made to his 20 workers were not reflected in his bookkeeping or tax statements and that he used the federal pandemic payments in large part to to repay family members and friends in Vietnam who had loaned him money to keep his business afloat. The FBI agent did not buy that:

My review of records from Vo's E-Trade and Robinhood accounts shows primarily trading activity that began following the accounts' receipt of PPP and other pandemic funds. Contrary to Vo's statement to investigators, it does not show withdrawal activity consistent with repayment to others.

Innocent, etc.

Complete affidavit (4.2M PDF).

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Comments

Looks like one of them is Saté Grill. Do you know what the others are?

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Voting closed 23

Unsure, but a bunch of food trucks including that one park in the ally behind blackbird donuts / jump on it / Fire Department Repair yard area, between Star Market and the Pike.

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The court filings don't list them. I found his name associated with some trucks, but didn't put them in the story because he has a history of changing names and foods and I didn't want to unfairly associate any trucks that might still be on the road but without any connection to him any longer (for example, see the record from a 2011 Cambridge Licensing Board hearing - search on "Loc Vo").

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Voting closed 20

So many stories like this. Was there any COVID relief funding that was not obtained fraudulently?

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The thing is, the government decided to get money out fast, without the sort of more rigorous checking they might otherwise do. So in the first round of PPP funding, a lot of big chains/operators got money they shouldn't have, and you have cases across both rounds of PPP funding like this.

Disclaimer: I got a PPP loan/grant, but I used it just for what I said I would: Payroll, which in my case, as a sole proprietorship, specifically meant replacing the money I was no longer getting from a collapsed online ad market.

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Voting closed 25

I worked for two nonprofits over the past 3 years, both received legitimate ppp loans and used them as intended. My brother, a hair stylist, also received EIDL and used it as intended. Unfortunately we only hear about the infamous cases where they didn’t.

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We hear about those infamous cases because they seem to comprise the bulk of the money.

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It's almost as if the person running the government when this policy was instituted was simultaneously completely corrupt and incompetent...so that even the little guys thought they could join in on the grift.

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News sources don't write big headline stories about someone getting a legitimate PPP loan and using it to keep their business open, saving the jobs of their employees. "STORE DIDN'T CLOSE THANKS TO PPP" just isn't a front page story.

Furthermore, what makes these news is that they were caught. As Adam says above, there was less pre-vetting than usual because the situation was dire for so many smaller businesses. No matter how careful you are, there are going to be some people erroneously given PPP and some erroneously denied. When you decrease one percentage, the other goes up. A decision has to be made as to which type of error is more harmful. In this case, false denials were considered a worse error during this emergency.

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Voting closed 8

We hear about these infamous cases because “donut shop gets PPP money, stays afloat” doesn’t sell page clicks. Most of us reading the news have no idea whether fraud was a minuscule, modest, substantial, or overwhelming share of the total.

[edit: somehow missed mg having said the same thing before I posted this]

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Voting closed 10

My company among others used it to cover a gap when our revenue dropped to zero overnight because our business couldn't operate. Fortunately for us, we bounced back fast, but without the loan, we might not have made it.

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