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March 25, 2021Phoenix, AZ, United StatesCOVID-19, Financial Crimes

Phoenix man charged with fraud after seeking over $450,000 in COVID relief funds

PHOENIX — A local area man was charged Wednesday for fraudulently seeking over $450,000 in COVID-19 relief guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Homeland Security Investigations (HSI), the Internal Revenue Service Criminal Investigation (IRS-CI) and the FBI are investigating this case.

James Theodore Polzin, 47, of Mesa, was charged by criminal complaint, unsealed Wednesday, after he was ordered detained at a hearing in U.S. District Court, District of Arizona. He is charged with three counts of fraud in connection with major disaster or emergency benefits and three counts of wire fraud.

The complaint alleges that between May 2020 through at least July 2020, Polzin provided false loan applications claiming nonexistent employees and revenues for businesses he supposedly owned and operated. He further submitted supporting loan documents that contained contradicting information for the same businesses on each application – all of which were false and fraudulent.

The complaint further alleges that in support of the fraudulent EIDL loan applications, Polzin purchased a home in Gilbert, Arizona, in June 2020 for which he paid nearly $400,000 in cash. Bank records show two bank accounts receiving Paycheck Protection Program (PPP) loan disbursals of several hundred thousand dollars between April 2020 and June 2020.

The CARES Act is a federal law enacted March 2020. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

The EIDL program is designed to provide economic relief to small businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities, and fixed debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.

A criminal complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Suspicious activity can be submitted online at ice.gov/tipline, by phone at 866-DHS-2-ICE or by contacting your local HSI office.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice's National Center for Disaster Fraud Hotline at 866-720-5721, or via the NCDF Web Complaint Form found here.

Updated: 03/26/2021