D.A. Bragg: Gregory Blotnick Sentenced to 1 to 3 Years for Multimillion-Dollar “PPP” Loan Scam and Securities Fraud

June 9, 2022

Manhattan District Attorney Alvin L. Bragg, Jr., today announced the sentencing of New York City-based investment manager GREGORY BLOTNICK, 35, for fraudulently obtaining over $4.6 million from the United Stated government and multiple investors. In total, BLOTNICK sought over $6.8 million in Protection Program (“PPP”) loan disbursements and fraudulently obtained over $4.6 million in PPP funds.

From April 2020 through March 2021, BLOTNICK submitted 21 fraudulent PPP loan applications to 13 lenders on behalf of nine purported businesses that BLOTNICK controlled. BLOTNICK pled guilty to Grand Larceny in the First Degree, Scheme to Defraud in the First Degree, and five counts of violating the Martin Act. He was sentenced to 1-3 years incarceration and executed a confession of judgment totaling $353,000 in favor of several of the investors he defrauded.
“These forgivable loans were created during the COVID-19 pandemic to support businesses in crisis and help retain jobs. As thousands of New York City businesses were forced to close, Mr. Blotnick diverted millions of these funds for his own personal benefit,” said District Attorney Bragg. “If you know someone who has committed this type of fraud, we urge you to call us at (212) 335-8900.”

BLOTNICK was sentenced in federal court on June 7, 2022 to 51 months incarceration. In addition to the prison term, BLOTNICK was sentenced to two years of supervised release and ordered to pay $4,577,631 in restitution.
According to the state indictment and documents filed in court, from November 2019 to April 2021 BLOTNICK, a dual New York and Florida resident, applied for PPP loans on behalf of his hedge fund and other investment entities under his control, which were not eligible to receive PPP funds by virtue of the fact that they engaged in ineligible industries; (ii) materially misrepresented his businesses’ industries to several banks and the Small Business Administration (“SBA”) in order to obtain the loans; and (iii) provided materially false and/or fraudulent information on PPP loan applications to lending institutions and submitted forged supporting documentation. Specifically, in order to obtain the PPP funds, BLOTNICK falsified information to the lenders including, among other things, the number of employees that were employed by his purported businesses, payrolls documentation, federal tax returns, and his businesses’ bank statements. These falsified documents were ultimately submitted to the SBA.
BLOTNICK used the fraudulently-obtained PPP funds for speculative trading and to inflate his hedge fund returns. As BLOTNICK hedge fund was suffering significant losses due to a combination of the effects of the pandemic and his own poor investment management, he fraudulently inflated his fund’s performance to investors and prospective investors.

BLOTNICK concealed his fund’s performance while investing the misappropriated PPP loan proceeds and using the proceeds to pay out returns to some of his investors, whose investments had suffered drastically. According to DANY’s financial analysis, almost all of the PPP funds obtained by BLOTNICK were transferred to the brokerage accounts he held at Interactive Brokers LLC and were subsequently depleted in high-risk trades. None of the PPP funds were used for their designated purpose as BLOTNICK entities did not employ a single employee.
Assistant D.A. Gabriel Hippolyte handled the prosecution of the case under the supervision of Assistant D.A.s Steve Pilnyak (Principal Deputy of the Major Economic Crimes Bureau), Julieta V. Lozano, (Chief of the Major Economic Crimes Bureau), and Gloria Garcia (Deputy Chief of the Investigation Division) as well as Christopher Conroy (Executive Assistant D.A. and Senior Advisor to the Investigation Division) and Executive D.A. Susan Hoffinger (Chief of the Investigation Division). Assistant D.A. Bonnie Seok of the Rackets Bureau and the following members of the D.A’s Office also assisted in the prosecution of the case: Senior Financial Investigator Joseph Dunn; Paralegal Benjamin Kobrin; Analyst Anna Kuritzkes; Analyst Pauline Davis; Senior Investigator Louis Capolupo; and Investigator Rachel Dragos.
D.A. Bragg thanks former Assistant D.A. Daniel Poulos; former HTAU Analyst Richard Rojas; former Paralegals Nicholas Manriquez and Bianca Li; and the Palm Beach County State Attorney’s Office, and in particular Assistant State Attorney Greg Kridos, and the West Palm Beach Police Department, specifically Detective Fernando Palacios, for the assistance and support they provided with the investigation.
Defendant Information

  • Grand Larceny in the First Degree, a class B felony, one count
  • Scheme to Defraud in the First Degree, a class E felony, one count
  • Martin Act Securities Fraud, a class E felony, five counts
  • 1-3 years to run concurrent on all counts and, nunc pro tunc, to the sentence to be imposed in United States of America v. Gregory J. Blotnick (Mag. No. 21-15165).