Liberty car dealer admits PPP loan fraud

Howard Braunstein, the head of a once-thriving auto dealer empire in Liberty, New York has pleaded guilty to a federal fraud charge.

U.S. Attorney Damian Williams accused Braunstein of submitting fraudulent applications to obtain a Paycheck Protection Program loan for M&M Auto Group Inc. and then for forgiveness of the loan, in a criminal information filed Oct. 26 in U.S. District Court, White Plains.

The PPP loan program was created by Congress in the early days of the pandemic, enabling small businesses to cover payroll and operating expenses. Later, they could ask the U.S. Small Business Administration to forgive the debts if at least 60% of the loans were used for payroll expenses.

The alleged fraud took place from April 2020 through October 2021, according to the brief charging documents, but the prosecution does not describe how M&M”™s applications were falsified or say how much money the company received.

According to a PPP database, Braunstein companies received two loans totaling $731,669. M&M Auto Group Inc. got $350,000 in May 2020 to cover the payroll of 24 employees. M&M Powersports Inc. received $381,669 in April 2020 to cover the payroll of 23 employees.

The auto empire was founded in 1989 by Braunstein”™s father, Martin Braunstein, and grew into a major car dealer in Sullivan County, representing the Chrysler, Ford, GM car brands and Polaris recreational vehicles.

In 2019, M&M Auto and two affiliates filed for Chapter 11 bankruptcy reorganization. Braunstein declared in a bankruptcy affidavit that M&M had been struggling since 2008 and the Great Recession.

He also cited a lawsuit filed by M&M minority owner Ecars Factory LLC as the immediate reason for bankruptcy, because Ecars was threatening to freeze M&M”™s bank accounts. A few months later, GM Financial sued M&M for more than $400,000 for defaulting on a loan.

The bankruptcy actions were dismissed at the end of 2019 because the businesses were insolvent, according to a court document, lenders were liquidating the assets, and it was no longer feasible to reorganize.

Braunstein then pivoted to working as a broker on behalf of new car buyers.

In the criminal case, Braunstein was released from custody upon posting a $250,000 appearance bond. Sentencing is scheduled for Feb. 22 before U.S. District Judge Philip M. Halpern.