The founder of a Lowcountry charity group is accused of being part of a multi-state fraud network that has diverted millions of dollars from a government loan program established to help companies survive the COVID-19 crisis.
Devonte Demond Thames reportedly spent part of the nearly $ 410,000 in taxpayer funds that his Hollywood organization received on travel and luxury goods. In addition, he paid bribes to members who filled out false papers to help him and others obtain more than 40 loans, totaling nearly $ 18 million from the federal Paycheck Protection Program, according to a lawsuit this week. .
The Trump administration created the PPP as part of the CARES Act nearly a year ago to provide companies with forgivable loans to preserve jobs after the COVID-19 pandemic has paralyzed much of the economy.
The FBI identified Thames as the founder of a nonprofit foundation that he named after his late grandmother. By the end of May, his bank account had dropped to about $ 400, according to the lawsuit.
His financial fortunes quickly changed after Thames somehow crossed paths with a bank fraud co-organizer who was identified only as “CHS 2” and who is cooperating with investigators.
CHS 2, a South Florida resident, reportedly started playing the system about two months after the health crisis with Phillip J. Augustin, who is described in legal documents as a personal manager for National Football League players. Working together, they applied for and received a PPP loan of about $ 84,500 in mid-May to a company that Augustin belonged to using false financial statements and other false documents, according to the court case.
They then became intermediaries, leaving “to work on getting more and bigger loans” from the program on behalf of other companies, usually in exchange for a 25% reduction in borrowers, according to the court case. Funding requests typically ranged from several hundred thousand dollars to as much as $ 1.24 million.
“To inflate the size of these PPP loans and the corresponding kickbacks, the conspirators relied on a variety of false statements … sending bank statements and counterfeit payroll tax forms,” said a special agent at the FBI’s Miami office in a sworn statement that was opened this week.
Hollywood’s Devonte Thames was arrested on March 3 and implicated in a bank fraud that targeted the federal Paycheck Protection Program. Provided / Charleston County Detention Center
They also recycled almost replicas of the same financial documents for various applications, making only minor changes before submitting them.
In all, the duo submitted at least 90 loan applications for a combined amount of $ 34 million and were approved for $ 17.6 million before CHS 2 was arrested on June 25 and started telling the authorities how the operation worked. .
Augustin was indicted in August, along with five other individuals, in an expanding fraud investigation that extends from Florida to Ohio and now in South Carolina.
Thames founded the Berneta E. James Foundation LLC in 2019. In the same year, his new group helped sponsor a community walk and a Louisiana-style food festival on James Island to raise awareness of breast cancer, according to with an appearance he made on a local TV station.
It is unclear how he and CHS 2 were introduced. But on May 28, less than two weeks after the cashless foundation lost its charitable status by failing to submit its annual financial report, the Thames group requested PPP money.
The paperwork was sent electronically through a bank to the US Small Business Administration. Thames was shown as the organization’s owner, who claimed an average monthly payroll of nearly $ 164,000 and 21 employees.
Based on these figures, the funding request was $ 409,735. The money was approved and transferred to the foundation’s bank account the next day.
After reviewing the financial records, the FBI said that “it didn’t look like much, if any, of the … revenue was for business or payroll-related expenses” as needed.
Authorities also learned that the foundation, which listed its address as a home on Gertrude Street in Hollywood, did not file federal tax documents or report any salaries or employees to the state in 2019 or the first quarter of 2020.
The online paper trail for the loan eventually led to CHS 2, which “confirmed” that the application was based on fraudulent information. The government also started monitoring communications between the informant and the Thames, starting in January.
At one point, Thames proposed a plan to apply for more PPP loans for two other ventures in which he was involved. He also offered to bring other borrowers into the scheme. Unaware that the investigators were listening, Thames described in a phone call how to make a bribe payment without arousing suspicion.
“If you can pay a visit to South Carolina and, like, come here, you choose a location … and I bring some money or whatever … That way, it is not possible to track it,” he told CHS 2.
The FBI testimony did not provide a complete accounting of almost $ 410,000, but it appears that most of the money was spent. More than $ 254,000 was withdrawn from ATMs in cash increments of $ 8,000 to $ 9,000 between June and November. About $ 82,000 went to kickbacks.
The FBI also suspects that the foundation’s loan was used to pay unspecified personal expenses and to purchase luxury items at Louis Vuitton, Gucci, Neiman Marcus and other luxury retail stores in Las Vegas, Beverly Hills, Houston, Charlotte, Atlanta and Charleston, based on a review of bank records.
The $ 18,545 shopping spree corresponds to posts on a publicly accessible Instagram account that “contained images that seemed to portray the Thames in some of those cities at or around that time … those purchases were made,” according with the testimony.
The US Marshals Service arrested Thames on March 3. He was released the following day on $ 20,000 bail after a hearing in federal court, where he was represented by a public defender. His case was moved to South Florida, where the investigation is ongoing.