Hedge funds, former Treasury Secretary Steve Mnuchin belatedly and no doubt rather unhappily made clear after his former colleague Anthony Scaramucci inadvertently forced his hand, were not supposed to be eligible for the Paycheck Protection Program, under which the federal government (through some less-than-disinterested intermediaries) has handed out more than a half-trillion dollars in forgivable low-interest loans designed to keep their employees on the payroll and off the dole. Of course, lots of people decided to ignore that part of the bargain. One man (a Citadel alum, no less) allegedly decided to do so in concert with disregarding the sign that read “no hedge funds allowed,” along with other annoying laws, rules and regulations for good measure.

Gregory Blotnick is accused of misrepresenting payroll expenses at his companies Brattle Street GP LLC and BSC Management LLC in applications for five PPP loans between April and August of 2020, each from a different bank. Based on the allegedly false information, the lenders approved a combined $2.4 million in PPP loan funds for the companies.

Prosecutors allege the loans were never used to pay employees, and Blotnick instead funnelled the majority of the funds into personal trading accounts ‘and subsequently lost them in trading activity.’

He is also accused of wiring hundreds of thousands of dollars to a person identified as a previous investor of Blotnick’s investment management firm….

He pled not guilty at his April 16 arraignment, the D.A.’s office confirmed to Citywire.

Hedge fund manager charged with $2.4 million PPP loan scam [CityWire]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

Related

(Getty Images)

‘Ineligible For PPP’ Has As Much Meaning To Hedge Funds, Private Equity Firms As ‘Alpha’

Alts shops sure got a whole lot of money they allegedly aren’t entitled to.

gavel-money-bills-law-legal-litigation-finance-300x221

Hedge Fund Invests In Allegedly Defrauded Anti-Fraud Specialist

Litigation promises to be much more lucrative than whatever it was NS8 pretended to be doing.

By Chris Potter (Flickr: 3D Judges Gavel) [CC BY 2.0], via Wikimedia Commons

Older Brother Sells Out Younger Brother In Alleged Crypto Hedge Fund Fraud, But Notes That Real Villain Is SEC

If they’d just unfreeze those assets, his little bro would quickly get them back to his alleged victims, he’s pretty sure.

gavel-money-bills-law-legal-litigation-finance-300x221

Global Pandemic To Evolve Into Epidemic Of Fraud Lawsuits

When the going gets tough, those in a tough spot cheat, according to eager lawyers.

jones beach

Nassau County Is A Hotbed Of Fraud And We Couldn’t Be Prouder

From meat mislabeling to a guy named Heckler cold-calling Ponzi scheme victims, it’s been a delightful month on Long Island.

lamborghini

Allegedly Fake Companies Allegedly Bought Some Very Real, Very Fast Rides

Mustafa Qadiri (allegedly) knows what we’re talking about.