A Rockland businessman was arrested June 9 on charges that he ripped off a Covid-19 disaster relief program for $1.6 million loaned to nearly a dozen similarly-named entities.
A federal grand jury in White Plains indicted Eliezer Scher, 33, of Spring Valley, on one count of wire fraud. Scher entered a plea of not guilty before U.S. Magistrate Judge Judith C. McCarthy.
He allegedly falsified applications for loans from the Economic Injury Disaster Loan program administered by the U.S. Small Business Administration.
The EIDL program was created to help businesses recover from the economic impact of the Covid-19 pandemic. The funds could be used only for working capital and other normal business expenses.
Loan sums were based on gross revenues and the costs of goods sold during the twelve months before Jan. 31, 2020. Businesses could also apply for up to $15,000 in advances that would not have to be repaid.
In about four hours on July 13, 2020, according to the feds, Scher submitted 12 internet applications for $160,000 loans, each including $10,000 in advances, and totaling more than $1.9 million.
The SBA approved 11 of the 12 applications. Within 52 days, the four hours of work netted Scher $1,648,000, according to the indictment.
But the feds claim that Scher falsified the revenues and expenses for each business. And instead of using the funds for business operations, he allegedly bought real estate and paid credit card expenses.
Rockland property records show, for instance, that Scher bought a house on South Madison Avenue, Spring Valley, for $471,000 in November 2020. He transferred the property to a business he controlled and sold it last August for $665,000, a gain of $194,000.
The indictment does not explain what drew attention to Scher, but perhaps the similarities of the businesses were a red flag.
Ten of the applications were sequentially named “Scher” plus a numeral, for example, Scher1 Inc. and Scher2Inc. Another is named Scher Realty Group. The only dissimilar name was Truck Your Way Inc.
All but one have the same address in Monsey. All claimed to have one employee.
The Scher-numbered entities included duplicate purposes: three billing services, three construction companies, two printing and graphic design businesses and two advertising businesses.
But Scher could not have imagined the alleged fraud when he incorporated the companies. All 12 were formed between July 2015 and February 2018, according to state corporation records, well before the pandemic and the creation of the EIDL program.
Scher was released from custody on posting a $250,000 bond. His attorney, Gedalia M. Stern, did not respond to an email asking for his client’s side of the story.
The indictment includes a forfeiture allegation that seeks to seize any of Scher’s property that that can be traced to the alleged crime, and if no such property is located, any other property he owns to cover the losses.
Assistant federal prosecutor James McMahon is handling the case.
