Feds Charge Texan With Funneling PPP Funds To Buy Crypto

By Philip Rosenstein
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Law360 (July 14, 2020, 10:30 PM EDT) -- A 29-year-old Texas man has been arrested on charges he fraudulently obtained $1.1 million through the Paycheck Protection Program and used the funds to bankroll a cryptocurrency account, the U.S. Attorney's Office for the Southern District of Texas announced Tuesday.

Houston resident Joshua Thomas Argires was charged with wire fraud, bank fraud, making false statements and unlawful money transactions after he received over $1.1 million in PPP funds that he then spent funding a cryptocurrency wallet and through ATM withdrawals, according to the announcement. The congressionally authorized PPP initiative is meant to provide relief to small businesses impacted by the economic fallout from the coronavirus.

Argires applied for the PPP loans for a landscaping business and a barbecue restaurant called Texas Barbecue, for which he claimed hundreds of thousands of dollars in payroll costs, but neither were legitimate recipients of that amount of federal money, the U.S. attorney's office alleges.

"On both applications, Argires claimed that the business entities seeking the loans had numerous employees and significant payroll expenses," the complaint said. "However, neither entity had any employees, and neither paid any wages. Because of these misrepresentations, Argires was able to obtain over $1.1 million in PPP loan funds that he would not have been provided had he been truthful."

According to the complaint, none of the over $1.1 million obtained by Argires through the PPP initiative was used for any expenses allowed under the program. In mid-May, Argires opened an account with Coinbase on behalf of Texas Barbecue and funded it with a total of over $950,000 from the PPP loans, according to allegations in the complaint.

On recorded calls that Argires had with the financial institution holding the PPP funds he obtained, he said at one point that one of the transfers to the Coinbase account was "for two weeks payroll," according to the complaint. When asked on a separate call by a representative at the financial institution about Coinbase, Argires allegedly said that he believed employees were paid through the cryptocurrency account, adding that "I don't really manage that aspect of it."

The complaint counters that "evidence indicates that Argires has exclusive control of the Coinbase account. Indeed, Argires is the sole user associated with the account, and there is no indication that anyone else manages this account for him." The complaint further alleges that Argires' investments in cryptocurrency generated a profit.

Launched at the beginning of April, the Small Business Administration-run Paycheck Protection Program offers low-interest loans of up to $10 million to cover payroll costs, rent and other overhead expenses for a set number of weeks. Those loans can then be forgiven if the businesses hold up their end of the deal by keeping employees on the payroll.

Counsel for Argires did not respond to a request for comment Tuesday.

The U.S. is represented by James Donald McAlister of the U.S. Attorney's Office for the Southern District of Texas.

Argires is represented by public defender Aisha Japera Dennis.

The case is U.S. v. Argires, case number 4:20-mj-01211, in the U.S. District Court for the Southern District of Texas.

--Editing by Daniel King.

For a reprint of this article, please contact reprints@law360.com.

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