A West Los Angeles man pleaded guilty today to federal charges stemming from a scheme that used a series of corporations he controlled to fraudulently obtain approximately $9 million in loans from COVID-relief programs, some of which he used on gambling excursions to Las Vegas and transferred to his stock trading accounts.
Andrew Marnell, 41, who resides in the Beverly Grove neighborhood, pleaded guilty to one count of bank fraud and one count of money laundering.
Marnell admitted that he fraudulently obtained Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Marnell obtained seven PPP loans from financial institutions for corporations he controlled that brought him just under $9 million.
Marnell submitted fraudulent loan applications that made numerous false and misleading statements about the companies’ business operations and payroll expenses. Marnell, often using aliases, submitted fake and altered documents, including bogus federal tax filings and employee payroll records.
The PPP program was implemented by the CARES Act, which was signed into law in March 2020 and was designed to provide relief to businesses affected by the coronavirus pandemic. The CARES Act also provided funding to The Economic Injury Disaster Loan Program (EIDL) administered by the SBA. Marnell admitted that he fraudulently obtained $170,000 in EIDL loans.
Once the loans were funded, Marnell transferred millions of dollars from the fraudulently obtained loan proceeds to his brokerage accounts to make risky stock market bets, according to court documents, which note that Marnell spent hundreds of thousands of dollars in fraudulently obtained loan proceeds at various gambling establishments.
As part of the plea agreement, Marnell agreed to forfeit items related to the pilfered PPP loan funds, including more than $1.54 million seized from several brokerage accounts, $319,298 in cash recovered from his residence, numerous electronic devices, a Rolex Oyster watch, a Range Rover and a Ducati motorcycle.
As a result of his guilty pleas, Marnell will face a statutory maximum sentence of 40 years in federal prison when he is sentenced by United States District Judge R. Gary Klausner on February 14, 2022. In addition to any prison sentence he receives, Marnell has agreed to pay restitution to the victim lenders to compensate the losses this case, an amount believed to be $7,341,376.
Marnell has been in custody since his arrest in this matter on July 16, 2020.
The Federal Housing Finance Agency’s Office of Inspector General, the FBI, the Federal Deposit Insurance Corporation’s Office of Inspector General, IRS Criminal Investigation, the Treasury Inspector General for Tax Administration, and the Small Business Administration’s Office of Inspector General investigated this matter. The California Department of Justice’s Bureau of Gambling Control provided valuable assistance.
Assistant United States Attorney Kerry Quinn of the Major Frauds Section and Justice Department Trial Attorney Scott Armstrong of the Criminal Division’s Fraud Section are prosecuting this case.
In May, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.