A Mount Vernon businessman who played a role in a $4.6 million Paycheck Protection Program scam has been sentenced to federal prison for 16 months.
U.S. District Judge Cathy Seibel also ordered Gary Wheeler to pay back $412,375 to the U.S. Small Business Administration and to forfeit $348,119 in ill-gotten gains, on July 23 in White Plains federal court.
Wheeler, 48, participated in a scheme devised by Glenroy Walker of New Rochelle and Howard Levy of the Bronx, according to court records, to submit bogus loan applications to the SBA.
The Paycheck Protection Program was created in 2020 to help small businesses weather the Covid-19 pandemic. If funds were used for the specific purposes meant to help businesses survive the pandemic, such as covering payroll and rents, the loans could be forgiven. In effect, small businesses got free money to keep the economy going.
Walker and Levy submitted more than a hundred PPP applications on behalf of 56 individuals, seeking $14.7 million, according to court records. Thirty-nine loans totaling $4.6 million were approved.
Loan applications were riddled with false information about businesses and were supported with fabricated federal tax returns and bank statements. Applicants typically kicked back 15% of the funds they received.
Wheeler received $412,375 to support Garden Bar & Grill, Matrix Data Group and Peak Business Group, and he tried to get nearly $150,000 for 50 High Holding Corp. According to court records, he paid $64,256 in kickbacks to Levy and Walker.
He pleaded guilty to wire fraud on Jan. 5.
Defense attorneys Richard A. Portale and Chad Mair recommended a sentence of time served. They argued in a memo to the judge that Wheeler played a small part in a large scheme and, like many small business owners, suffered during the pandemic. Eventually, he closed Garden Bar & Grill and Peak Business Group.
Wheeler grew up in a tough neighborhood in Mount Vernon, after his parents separated when he was 8 years old, and he ran with a rough group. By 14, he was jailed for robbery. At 17, he was sent to prison for six years on a gun charge.
His attorneys describe a man who also became a role model for his children; who provided emotional support and everyday assistance for a half-brother suffering from cerebral palsy; and who became a stabilizing force in Mount Vernon by creating businesses that employed minorities.
Letters submitted to the judge by friends, colleagues and minister, his attorneys said, “reveal him to be a kind, selfless man dedicated to improving the lives of those around him.”
Assistant prosecutors Jared D. Hoffman and Derek Wikstrom recommended a prison sentence within the federal guideline range of 24 to 30 months, to deter such crimes.
He exploited a public emergency and a program designed as a lifeline for small businesses. It was essential to distribute money quickly in the throes of the Covid-19 crisis, they said, so the government suspended some controls traditionally required for loans.
Simply put, the prosecutors argued in a letter to the judge, “the PPP relied on applicants to tell the truth and Wheeler betrayed this trust and took advantage of the pandemic to line his own pockets.”
They also noted that Wheeler has seven prior convictions, including several for violent crimes. They cited a statement from a Probation and Pretrial Services official: “While Wheeler is no longer committing violent crimes, it is particularly concerning that he has not yet aged out of criminal conduct.”
Judge Seibel recommended that the Bureau of Prisons place Wheeler as close as possible to Westchester County to facilitate family visits. She ordered him to surrender on Oct. 23.
Levy and Walker, the alleged conspirators who set up the PPP scheme, have not yet been adjudicated. Levy is expected to enter a guilty plea on Aug. 27, according to court records, and Walker’s attorney has asked for more time to speak with his client.
