A Chittenden County man allegedly used false documents to obtain a loan through a federal Covid-19 business aid program and then used $ 380,000 of the money to buy a house in Milton.

Dennis Duffy II, 38, von Winooski pleaded not guilty to three federal charges in the US District Court in Burlington on Monday.

The charges accuse him of providing false information to obtain a $ 416,093 paycheck protection loan and then conducting a fraudulent financial transaction in which he failed to use most of the loan to buy his company's payroll rather than buy a home.

Duffy also pleaded not guilty on a separate indictment alleging that he was involved in a $ 125,000 fraud scheme for American Express in 2017.

Duffy was released on conditions while awaiting trial.

Michael Desautels, a federal defense attorney who represents Duffy, declined to comment on the charges on Monday, as did U.S. Assistant Attorney Gregory Waples, the prosecutor.

An 11-page indictment sets out the scheme Duffy allegedly used to deposit money through the state paycheck protection program for himself rather than his cleaning company. Duffy is accused of filing false documents with the NorthCountry Federal Credit Union on June 30, 2020 when he applied for $ 416,093 in PPP funds.

Among the bogus documents in the indictment was an alleged corporation tax return for 2019 with gross receipts of more than $ 7.2 million and taxable income of $ 382,000. However, in his actual return to the U.S. Internal Revenue Service that year, he reported that the cleaning company had only $ 77,669 in gross revenues and a net profit of $ 15,785.

Duffy had also filed bills showing the cleaning company paid $ 11,416 monthly rent to a real estate company for May and June 2020. "In truth and in fact," the indictment stated, "both bills were fake and Night Owl Cleaning never paid the real estate company a rent".

The NorthCountry Federal Credit Union approved the loan and deposited $ 416,093 into Night Owl's account with the credit union on July 1, 2020, the indictment reads.

A few days later, on July 9, 2020, Duffy reportedly signed a contract to buy a house on East Road in Milton for $ 385,000, with the proceeds from the PPP loan being used for a down payment of $ 7,700 became.

About a month later, on Aug. 17, 2020, Duffy used the proceeds of the PPP loan to obtain an official check from the credit union for $ 383,616, the indictment said. The check was made out to Duffy's attorney, who represented him in the house purchase, court documents say, and the money was then used to buy the house on East Road in Milton the next day.

During Duffy's indictment on Monday, Judge William K. Sessions III questioned whether Duffy qualified for public defense services given his gross income was approximately $ 100,000 a year. Duffy told the judge that his monthly salary is between $ 6,000 and $ 7,000 a month, and the expenses devour almost everything, including housing, insurance, and child support costs.

Sessions agreed to continue having a public defender represent him, but informed Duffy that the judge might decide to get Duffy to "donate" some money to cover these costs once his case was closed.

Julie Longfellow, Public Information Officer for the NorthCountry Federal Credit Union, stated in an email on Monday that the institution is "proud of the work our business team has done to help deserving businesses access PPP funds." . She added that while the credit union does not comment on any pending litigation, "NorthCountry is fully cooperating with law enforcement and any investigation."

Prosecutors allege Duffy also committed an independent fraud against American Express in 2017. According to the indictment, Duffy applied for and obtained an American Express credit card for his company and made three fraudulent purchases totaling $ 125,000 from a company allegedly called Vermont Aerial between May and August 2017.

However, prosecutors allege that these transactions were fraudulent transfers to another Duffy-owned company, Pet Stop. Then, court documents claim, Duffy transferred that money back to a Night Owl Cleaning account and used it to buy two trucks and a car.

If all charges are convicted, Duffy faces 30 years in prison.

The government is also pushing for Duffy to return all of $ 561,093 he allegedly received through American Express's paycheck protection program and scams.

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source https://seapointrealtors.com/2021/08/10/chittenden-county-man-accused-of-using-383000-from-federal-ppp-loan-to-buy-home/

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