OC restaurant team documents $20 million PPP fraud lawsuit

LAGUNA NIGUEL, Calif. — John Nye operates Hendrix in Laguna Niguel, and with cafe operations again in comprehensive swing, he can barely imagine his small business survived the pandemic.

“It has been possibly the longest calendar year of my lifetime. It just didn’t get greater for so lengthy and it was devastating,” Nye stated. 


What You Require To Know

  • A $150,000 Paycheck Protection System (PPP) financial loan was taken out below Sentinel Cafe Team – the restaurant enterprise John Nye operates
  • In accordance to Nye, two folks he deemed mentors filed the PPP application without having his expertise
  • Nye submitted a lawsuit above the fraud searching for $20 million in damages
  • Tim Chang, an attorney for Kitti Lo, sent an e-mail saying she was not included in the personal loan application method or the distribution of the cash and denies all the allegations

A single working day in the course of the lockdowns, with his cafe vacant and a stack of payments piling up, he recognized a letter in the mail from the SBA. It was a statement requesting a payment on a $150,000 Paycheck Security Program (PPP) mortgage somebody experienced taken out beneath Sentinel Cafe Group — the cafe firm he operates.

On the other hand, Nye experienced no thought who submitted the software. It was like a sucker punch, Nye explained. He promptly called the financial institution.

“They would not converse to me about it for the reason that it was not in our identify. I was not listed on it, but it was towards my company. It was revenue that was assigned to me that I owe that has now impacted me in each individual section of my lifetime and I’m on the hook for it,” Nye said.

According to Nye, two people today he considered mentors, who experienced invested in his cafe team before Hendrix opened, experienced filed the PPP application with out his expertise.

Therefore, since of their PPP application, Nye’s was rejected.

Things have been produced even even worse when he filed a criticism of fraud with the financial institution. The circumstance was marked as opportunity fraud brought about critical ripple consequences for Nye’s business.

Nye explained he was in the middle of a as soon as-in-a life span financial investment offer involving the restaurants that abruptly vanished.

“They ended up making an attempt to finance the deal with a bank and the fraud came up as an notify and it soured the complete thing. It is sort of like it was our total long run. It was our retirement approach, our complete in the field, our glory times. It was promotions across the United States. It was the stuff you just desire of and it’s just long gone,” Nye stated.

A modern congressional investigation estimates a lot more than a billion bucks of PPP cash went to fraudulent applications all through the pandemic. Simply because of the domino influence damages, Nye filed a lawsuit around the fraud trying to get $20 million in damages.

Nye’s legal professional, Edward Susolik, who prosecutes fraud, said this scenario stands out in a increasing area of filings.

“At this degree of just brazen, absolute open fraud, (there is) not considerably but there is a sizeable volume of PPP fraud that is out there, as properly as EDD fraud,” Susolik stated. “This stands out since they did it so overtly. They realized they’d get caught.”

Spectrum News contacted the defendants, Amy Hsiao and Kitti Lo of Newport, California. 

Tim Chang, an lawyer for Lo, sent an e mail saying she was not concerned in the personal loan software system or the distribution of the resources and denies all the allegations.

“Kitty Lo was not included in any way in the transactions alleged in the Complaint. Without a doubt, as Ms. Hsiao expressly states less than penalty of perjury, Ms. Lo had no interest in Newport Cafe and Hospitality Group in 2020 and was not concerned in any fashion in the mortgage application procedure, the financial loan acceptance or the distribution of the financial loan resources.”

Spectrum News 1 did not listen to back again from Hsiao.

As for Nye, he said this was a tough lesson right after an exceptionally hard yr.

“Be cautious who you have faith in with your information. I just hope I can get again what I dropped mainly because of it,” Nye said.