A federal grand jury has indicted a Rockland County man with a contracting business in White Plains on a charge of making false statements in an application for a Hurricane Sandy disaster relief loan.
Leonardo Fabio, president of LLF Construction Services Inc., stated on the loan application that his business suffered economic losses because the storm had flooded a work site. Sandy made landfall in New Jersey on Oct. 29, 2012 and caused severe flooding throughout the New York City region.
The Small Business Administration approved a $257,800 loan at 4 percent interest to LLF Construction Services in February 2013.
Fabio had claimed that his business had no sales in November and December 2012, was not delinquent on any federal taxes and had no outstanding judgments or pending lawsuits.
Those statements were untrue, according to a criminal complaint filed by Angelo Palmeri, an agent for the SBA’s Office of Inspector General.
“LLF was struggling financially before Hurricane Sandy hit New York,” Palmeri said, and “Fabio applied the SBA funds to other debts and obligations of his business unrelated to the disaster.”
Fabio, of New City, did not respond to a voicemail message requesting comment.
LLF Construction Services’ bank accounts show deposits of $458,300, for work done for five different clients, in the two months after the storm.
Nearly four months before the storm struck, the state Department of Labor had filed a $25,048 judgment for failure to pay unemployment insurance taxes. LLF satisfied the judgment last year.
In January 2013, a month before the SBA loan was approved, the United Brotherhood of Carpenters and Joiners pension fund sued LLF in federal court to enforce a $74,178 arbitration ruling. The arbitrator’s opinion states Fabio contended that LLF had cash flow problems because general contractors had failed to pay $500,000 for work. Hurricane Sandy was not cited as a contributing factor.
The IRS filed numerous federal tax liens for unpaid payroll taxes from 2009 to 2014, totaling $134,705.
The SBA relies on truthful answers about debt, lawsuits and tax delinquencies, the complaint states, to assess an applicant’s creditworthiness. Loan officers take debts into account when deciding whether to approve a loan.
LLF received the loan in three installments from March to June 2013. It was required to make monthly payments of $1,671, beginning a year later. Fabio made some payments but stopped in March 2016.
As of May, LLF owed the SBA $246,588.
Palmeri interviewed Fabio on March 7. Fabio said LLF had no manpower, according to the agent’s account of the conversation, because the union would not allow its members to work on company projects.
Fabio said his business was in financial trouble before Hurricane Sandy, the criminal complaint states. He used some of the loan money to pay debts incurred before the storm. He said that he took out the loan to keep the business going, and that without the loan he would probably have filed for bankruptcy.
“Fabio conceded that he was afraid the loan would be denied,” Palmeri said, “if he had fully disclosed his debts to the loan officer.”