Kentucky business owner admits fraud involving $1.3 million in COVID relief money

A business owner in northeastern Kentucky has admitted taking part in fraud to receive more than $1.3 million in federal business aid.

John B. Montanez, of Greenup County, pleaded guilty Monday in federal court to one charge of wire fraud, for sending a fraudulent loan application over the internet, and one charge of possessing an unregistered sawed-off shotgun, according to court records.

Montanez used false information in applying for loans through two programs aimed at helping businesses weather the economic downturn caused by the COVID-19 pandemic starting in early 2020, according to his plea agreement.

One business he received a loan for was JBM Prince Pipeline Services, according to the court record.

Montanez exaggerated the number of employees at the business and the monthly payroll expenses at the company and submitted false tax-reporting forms in order to get approved for a bigger loan, his plea agreement said.

Montanez used that particular loan of more than $130,000 on “ineligible business or personal matters,” including large cash withdrawals and a transfer to his personal checking account, the plea document said.

Montanez fraudulently obtained a total of seven loans totaling more than $1.3 million four of them through the Paycheck Protection Program (PPP), in which loans were forgivable, and three under the Emergency Injury Disaster Loan program, according to his plea agreement.

During the investigation, Montanez gave a box of evidence, including records, computer hard drives and gun components, to someone else in an attempt to conceal the evidence, the court document said.

The wire fraud charge is punishable by up to 20 years in prison. The gun charge has a maximum sentence of 10 years.

U.S. District Judge David L. Bunning scheduled Montanez to be sentenced in September.

There have been a number of other cases of fraud involving coronavirus relief money in Kentucky, and it has been common nationwide.

A Congressional panel said in a report issued in December that while the PPP loans helped millions of small businesses during the height of the pandemic, at least tens of billions of dollars were likely given out to ineligible or fraudulent applicants.