Former Miami TD Bank manager gets 10-year sentence for swindling pandemic loan program

An executive who oversaw all of TD Bank’s branches in Miami-Dade County was sent directly to prison Thursday after a federal judge sentenced him to 10 years for orchestrating an inside job that swindled $15 million from a federal loan program meant to help small businesses struggling through the COVID-19 pandemic.

U.S. District Judge K. Michael Moore gave Daniel Hernandez, a retail marketing manager who supervised 80 bank employees at 27 TD branches, the stiffest punishment under federal sentencing guidelines after saying that Hernandez used his “white-collar” position to betray his government, his employer and his community.

“He took this money in the midst of a pandemic in this country,” Moore said at Thursday’s hearing in Miami federal court. “He stole it from us to line his own pockets.”

The judge’s sentencing for Hernandez was only two years longer than a federal prosecutor recommended for his punishment, but it sent a resounding message that fleecing the government’s Paycheck Protection Program amid a national emergency would be treated harshly. Hernandez is among dozens of pandemic hustlers in South Florida and thousands nationwide who have been convicted of fraud since Congress approved $813 billion in loan programs just after the coronavirus swept the country in March 2020.

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Hernandez, who had pleaded guilty to a wire-fraud conspiracy in December, choked up as he apologized profusely for his crime at Thursday’s hearing, saying “it was wrong at every level.”

“I am embarrassed, I am broken and I am disappointed, as my mistake is not one I was taught as a child,” Hernandez, 50, told the judge, as several of the defendant’s family members teared up.

During the height of the pandemic, Hernandez admitted that he pocketed kickback-like “commissions” as he collaborated with TD Bank customers, a former bank employee and other associates to submit falsified paperwork for 90 loans worth up to $25 million under the federal Paycheck Protection Program — all guaranteed by the Small Business Administration, according to a factual statement filed with his plea agreement.

In total, Hernandez and his illicit network received $15 million in fraudulent loans approved by TD Bank — described by federal prosecutor Eli Rubin as “one of the largest COVID-19 relief cases in the country.”

Rubin told the judge that Hernandez abused his management position at the bank amid a national emergency to enrich himself, by receiving “a percentage of every loan application that was approved.”

At Thursday’s sentencing, Hernandez’s attorney, Henry Bell, pointed out that his client turned over a significant portion of his share of the tainted proceeds — kickback fees totaling $606,060 — to the FBI at his law office. Hernandez will likely be ordered to pay back more money to the government at a pending restitution hearing.

Hernandez, who was fired from his TD Bank job before his arrest in August, faced between 8 and 10 years in prison under federal sentencing guidelines. His defense attorney, Bell, argued that Hernandez, who was his family’s sole breadwinner, should get 6-1/2 years, citing his turnover of the illicit money to the feds.

“It’s unusual that someone sitting on that amount of cash admits it and then turns it over,” Bell told the judge. “I’ve never seen it.”

Moore, the judge, was unswayed. Bell also asked him if Hernandez could surrender to prison authorities at a later date, and the judge refused.

In Hernandez’s case, a federal criminal affidavit accused the former TD Bank manager of masterminding an inside job to recruit bank customers to apply for PPP loans and to help them fill out their applications with fabricated information about the number of employees, payroll expenses and gross revenues. He allegedly used his position at TD Bank to try to ensure that their business loan applications were processed by his employer, though he was not directly involved in approving them.

New Jersey-based TD Bank, which is in the process of acquiring First Horizon Bank, said previously that it investigated Hernandez’s misconduct and assisted federal investigators and the U.S. Attorney’s Office in Miami.

“To protect our customers and the bank, TD has strong processes in place to identify, investigate, and deter potential fraud,” the bank said in a statement provided to the Miami Herald. “In this matter, we initiated an internal investigation, cooperated with law enforcement, and terminated Mr. Hernandez prior to his arrest.”

Three of Hernandez’s co-conspirators in the TD Bank fraud case have also been prosecuted by the U.S. Attorney’s Office:

▪ Armando Ariel De Leon, a former TD Bank employee in Miami-Dade, admitted in his plea agreement that he conspired with Hernandez to help customers open accounts at TD Bank and apply for phony PPP loans from the bank as well as other benefits from the Small Business Administration. De Leon received kickbacks from customers and Hernandez, court records show. De Leon, 51, who was fired from TD Bank in 2021, pleaded guilty to a wire fraud conspiracy in October and was sentenced to five years in prison last month.

▪ William Alexander Posada Sandrea, president of Autenticos Auto Sales Corp. in Miami-Dade, also collaborated with Hernandez and others to file falsified PPP loan applications for his company and other businesses. Posada, 43, pleaded guilty to a bank fraud conspiracy in July but failed to show up for his sentencing in November, court records show. He’s at large and has been designated a fugitive.

▪ Erich Javier Alfonso Barata, the president of two Miami-Dade companies, Black Hookah Inc. and EJ Networking & Security Service, is accused of collaborating with Hernandez and submitting bogus PPP loan applications. According to court records, Barata, 49, pleaded to a wire fraud conspiracy in January.

The Paycheck Protection Program approved by Congress in 2020 was designed to help businesses following shutdowns caused by the rapid spread of the coronavirus. The program, under the CARES Act, allowed for the loans to be forgiven, as long as borrowers followed criteria laid out by the SBA to use the funds for payroll and other overhead.

Determined to inject money quickly into the faltering economy, the U.S. government waived many traditional requirements that lenders normally check before issuing business loans — and that policy, according to the SBA’s inspector general, led to an “unprecedented level of fraud activity” because of the lack of controls.

As the nation’s No. 1 fraud capital, South Florida has led the financial crime wave that followed the passage of the CARES Act, according to the U.S. Attorney’s Office.

After losing billions of dollars in COVID-19 relief funds due to phony claims, the U.S. government in September started deploying investigative teams in South Florida, California and Maryland to zero in on criminal organizations that are suspected of stealing from public programs offering small business loans and unemployment insurance. The strike forces are working out of U.S. attorney’s offices.

Meanwhile, federal prosecutions of individuals and their businesses continue unabated in South Florida.

In January, Derek James Acree, an attorney in Palm Beach County, was sentenced to nearly 3-1/2 years in prison for submitting fraudulent loan applications seeking more than $1.6 million under the SBA’s pandemic relief programs. Acree, 47, who pleaded guilty to a wire fraud conspiracy in October, filed the bogus loans for companies he owned: National Financial Holdings Inc., NFH Florida LLC, DBA Finova Financial LLC, and National Financial Holding Technology LLC. The loans misrepresented the number of employees, payroll and revenues, authorities said.

After obtaining the loan proceeds, Acree transferred some of the money to others and used another portion to make a down payment on his home and repairs on his boat.

Also in January, Alexander Blaise of Plantation and his brother, Dumarais Blaise of Georgia, pleaded guilty to wire fraud conspiracy charges in Fort Lauderdale federal court stemming from a bogus $356,000 PPP loan application for a South Florida business, Acute Care Coordinating Systems PA. Alexander Blaise admitted that he was assisted by his brother, a tax preparer, in obtaining the pandemic loan and that the proceeds were deposited into another business, Blaise Podiatry, court records show. The brothers then split the illicit funds.

That same month, a Miami woman was indicted on charges of stealing $381,000 from the SBA’s program and using the loans to lease a 2021 Bentley Bentayga (sales price, $181,000), rent a Biscayne Bay apartment, pay for cosmetic dermatology procedures and refinish her designer shoes. Daniela Rendon, 31, pleaded not guilty to wire fraud and money-laundering charges and was released on a bond before trial.

In December, a Broward County man charged with swindling millions from the government’s PPP loan program was found guilty of nine counts of wire fraud, money laundering and aggravated identity theft. This month, Valesky Barosy, 28, was sentenced to six years in prison.

Barosy showed off his exploits while ripping off the SBA’s pandemic program, posting social media shots of himself driving an exotic Lamborghini and flying on a private jet.