Former IRS officer who also worked in tax enforcement for Oakland charged in $3M PPP loan scheme
The outside view of the front of Oakland City Hall on a sunny day on April 9, 2021, in Oakland, Calif. (Samantha Laurey/Bay City News)
OAKLAND, Calif. - A former revenue officer with the Internal Revenue Service, who also worked as a tax enforcement officer for the city of Oakland, has been charged in a $3 million scheme involving the Paycheck Protection Program (PPP), according to the U.S. Attorney’s Office Northern District of California.
Frank Mosley was among five defendants named in the case. He’s charged with conspiracy to commit bank fraud and aiding or advising a false tax return.
According to court documents, Frank Mosley and co-defendant Reginald Mosley had ownership and control over Oakland-based Forward Thinking Investors, Inc. (FTI).
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Prosecutors accused the two men of recruiting longtime acquaintances and now co-defendants Marcus Wilborn, Aaron Boren, and Scott Conway as part of the alleged loan scam. The Mosleys helped prepare fraudulent loan applications for the men and received kickbacks in return, according to court documents.
Prosecutors said the defendants "devised a scheme and artifice to defraud through which they obtained approximately $3 million as a result of fraudulent PPP-loan applications" submitted on behalf of FTI and three other Northern California companies.
Court documents said that in their PPP loan applications, the four companies purported to have between 19 and 49 employees and at least $150K in monthly payroll, "but in reality all four companies were little more than shell companies, with no payroll expenses."
Prosecutors said the defendants did not use the loan money for payroll or any legitimate business expenses. The men were instead accused of using the PPP funds for personal expenses, including personal credit card payments and distributions to family members.
Under the U.S. Small Business Association’s PPP program, businesses can use loan money for specified items, such as payroll or employee benefits, but loan recipients were not permitted to use the funds for day-to-day living or other expenses for personal needs.
"To cover up the scheme, Frank Mosley and Reginald Mosley created fake payroll accounts for some of the companies and submitted false payroll tax returns to the IRS," court documents said.
Prosecutors also noted that under Frank Mosley’s former position in the IRS as a revenue officer, the job commonly resulted in encountering schemes by taxpayers, including hiding assets and bank accounts by using shell corporations.
"Revenue Officers are trained to detect and investigate these schemes as part of civil, non-criminal, tax compliance efforts," the U.S. Attorney’s Office Northern District of California said.
The office added that Frank Mosley had worked as a tax enforcement officer for the city of Oakland since 2011.
He’s set to appear in federal court in Oakland on May 18 for an arraignment.