HOUSTON – Immediately after receiving more than $1.6 million from the Small Business Association’s Paycheck Protection Program, 29-year-old Lee Price III of Houston went on a shopping spree for luxury items, spending hundreds of thousands of dollars in a matter of days, according to court documents.
The money was part of the emergency COVID-19 relief program through the Small Business Administration, a program designed to help struggling small businesses pay their employees and stay afloat during the pandemic.
Recommended Videos
But prosecutors say Price defrauded the program by applying for five different loans at five different banks in Boston, Salt Lake City, Oklahoma City, Charlotte, and San Francisco — all to obtain money for non-existent companies that had no employees.
“The SBA’s mission is to help small business,” says Mark Winchester with the SBA’s Houston office, “and with Mr. Lee inappropriately using those funds, that’s one less business that was not able to utilize those funds as they could have.”
One such business is Imagine Me Academy, owned by Brandy Woods. She applied for $40,000 to keep her daycare centers open but was initially turned down.
“I got an email saying the money ran out,” Woods said. “Not only was I devastated, I was faced with the fact that I would have to tell my employees and the families we serve that I was going to have to close. It was one of the most horrible days of my life.”
When she heard about Price receiving more than a million dollars in fraudulent loans meant to rescue legitimate businesses like hers, she was stunned.
“For this man to just, literally, snatch that money from companies who need it? It’s deplorable,” she said.
According to the official criminal complaint against Price, he started spending that PPP money almost immediately on incredibly lavish items, including a $233,000 Lamborghini Urus, an $85,000 Ford F-350 pickup truck and a $14,000 Rolex.
Prosecutors say he also spent thousands of dollars at Houston night clubs and strip clubs, and more than $100,000 to lease office space in Memorial City.
Jerry Tarnopol, an SBA Loan Specialist at Community Bank, said with a program this big, fraud was a possible likelihood.
“It saddens me that it happened, but you’ve got to expect it’s going to happen with such a big program. There’s going to be fraud involved,” Tarnopol said.
Tarnopol’s group has handled more than 2,000 PPP loans, but said they only took applications from business owners they already knew.
The problem was some banks were actually paying to get as many loan applications as possible, from anyone who wanted to apply, he said.
One lender in the Northwest processed more than 100,000 applications.
“I know for a fact that bank took it from three online platforms. So, people would go into that platform, they would apply for their loan, and that bank would pay that platform money, commission, for getting the loan done for them,” Tarnopol said.
Price now faces federal charges of making false statements to a financial institution, wire fraud, bank fraud, and engaging in prohibited monetary transactions.
If convicted, he faces more than 30 years in prison.
He’s not the only one Federal Prosecutors have charged with crimes related to the SBA’s PPP program. There are others, and some even from the Houston area. See their charges below: