A California couple who allegedly used more than $1.36 million in loans from the federal Paycheck Protection Program to buy sport utility vehicles and homes in Kapolei and California has agreed to plead guilty.
Christopher A. Mazzei and Erin V. Mazzei, from Arroyo Grande, Calif., pleaded guilty Wednesday before senior U.S. District Judge J. Michael Seabright, according to federal court records.
The Mazzeis will remain free on bond before sentencing, which is scheduled for Jan. 9.
The couple was indicted in May 2022 for wire fraud, money laundering and conspiracy in connection with a scheme to defraud the
government of PPP loan funds meant to provide COVID-19-related relief to small businesses. They were accused of falsifying Internal Revenue Service tax returns and payroll records, which they submitted to banks, at least one of which is Hawaii-based, to support their claims for PPP loans.
According to a plea agreement with the U.S. Department of Justice, Christopher Mazzei entered a voluntary plea of guilty to two counts in the original indictment, which “charge him with conspiring with Erin Mazzei” to commit wire fraud affecting financial institutions and conspiring with Erin Mazzei “to commit money laundering.”
In return, federal prosecutors agreed to move to dismiss the rest of the original indictment after sentencing. They also agreed not to file charges related to the submission of false statements to one of the mortgage lenders involved in the case in connection with the
purchase of a house in Kapolei; the submission of false statements to a second mortgage lender in connection with an offer to purchase a house in Hauula; the submission of false statements to two additional mortgage lenders in connection with the purchase and later refinancing of a house in Arroyo Grande; and the illegal use of the identity of a third party while committing wire fraud, according to the agreement.
The Mazzeis’ attorneys, John M. Schum and Dan L. Cogdell, did not reply to a Honolulu Star-Advertiser request for comment. Assistant U.S. Attorney Gregg Paris Yates prosecuted the case.
The conspiracy charge carries a possible federal prison term of up to 30 years and a fine of up to
$1 million, followed by a term of supervised release of up to five years.
The money laundering charge is punishable by up to 10 years, a fine of up to $250,000 or “an alternative fine of not more than twice the amount of the criminally derived property involved in the transaction.”
It is also followed by three years of supervised release.
The couple used the pandemic loan money to buy a 2019 Ford Expedition, a 2019 Lincoln Navigator, a 2020 Lincoln Aviator, a home on Oak Hill Road in Arroyo Grande and a condo on Koio Drive in Kapolei.
The couple took “$1,365,000 in PPP funds to which they were not entitled, which they used to pay for personal expenses and an unallowable new business venture,” according to the plea agreement.
The couple also spent “$164,796 to film a promotional trailer for a television project, entitled ‘Ohana,’ that they planned to produce in the state of Hawaii.”
The CARES Act is a federal law enacted March 29, 2020, to provide emergency financial assistance to people dealing with the economic impact of the COVID-19 pandemic. The PPP program funded by the CARES Act provided forgivable loans to small businesses for job retention and other expenses.
The PPP allowed qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1% if the loans were used for payroll costs, interest on mortgages, rent and utilities.
