Feds arrest 2 brothers of lawmaker in COVID relief fraud case

U.S. Attorney for the District of Puerto Rico W. Stephen Muldrow

By The Star Staff

Federal authorities on Thursday arrested two brothers of New Progressive Party Rep. Jorge Navarro Suárez during a raid related to fraud involving U.S. government funds designated for COVID-19 relief.

In a radio interview, Navarro confirmed that Ricardo “Richard” and Edgardo Navarro were among those arrested.

“It’s a deep pain we feel,” the lawmaker stated during the interview. “As a family, we are sadly facing this. I know that everything will become clear in the end. They are my brothers. I treasure them both, and I will never turn my back on them.”

He noted that his brothers have been contractors for their entire lives.

“The corporation they own, prior to my becoming a legislator, has worked as a contractor in both the private sector and with the government,” Navarro added, denying any prior knowledge of the federal investigation.

Navarro added that he had been in discussions with authorities about business recovery funds for a year and that his brothers had been interviewed during that process.

Gov. Jenniffer González Colón said at a press conference later Thursday that “obviously, the federal government will have to prove guilt, the intent to defraud the federal government, and those cases will be reviewed.”

“But we, the government of Puerto Rico, must also combat fraud,” she added. “We have fraud in different areas, in the Department of Labor, and what does that do? It takes funds away from people who truly need it. So I am deeply sorry for the people who have already been accused. They have their turn to prove their innocence, and once that process is over, we will review it.”

The governor, who said she had not yet spoken with Navarro Suárez, reiterated the importance of those who are in genuine need of monetary relief from the federal government not having that relief put at risk “because there was someone who decided to illicitly take advantage of those benefits.”

“But here, no one, just because they have an elected official -- mayor, legislator, or agency head -- [in their family] is exempt from complying with the law,” González Colón said. “Here, everyone has to comply with the law. They put their hand in, they still have to pay.”

Earlier in the day, Limary Llovet, a spokesperson for the federal prosecutor’s office in Puerto Rico, reported that the case is being handled by the Secret Service’s Office of Investigations, the Small Business Administration Office of Inspector General, and the Internal Revenue Service’s Office of Criminal Investigation.

The case involves fraud related to funds allocated through the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which was authorized by Congress in 2020 to provide relief during the global COVID-19 pandemic.

U.S. Attorney for the District of Puerto Rico W. Stephen Muldrow had announced Thursday morning that the indictment of two businessmen, a certified public accountant, and four Puerto Rico-based companies for a fraudulent scheme to illegally obtain federal recovery funds under the CARES Act, bribe a bank employee, and launder the fraudulent proceeds of the scheme.

Early on Thursday, the U.S. Secret Service, in coordination with the law enforcement partners of the federal prosecutor’s office, executed a coordinated operation targeting a sophisticated financial fraud network, Muldrow noted.

According to court documents, Edgardo Navarro Suárez, Ricardo Luis Navarro Suárez, Ramón J. Valentín Montalvo, JCA Development Inc., JCA Packaging Group Inc., RVIP Group Corp., and JCA Industrial Supply Corp. knowingly devised a scheme and artifice to defraud and to obtain money and property from the U.S. Small Business Administration and Bank 1 by means of false and fraudulent pretenses, representations and promises submitted through applications for EIDL and PPP loans made available to help small businesses recover from the impact of the pandemic.

The court documents indicate that beginning no later than in or about May 2020, through at least November 2021, the defendants and their co-conspirators submitted and caused the submission of at least 26 Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) applications seeking a total of at least $2.2 million in EIDL and PPP proceeds from the United States Small Business Administration (SBA) and Bank 1, a Puerto Rico-based financial institution. The defendants and their co-conspirators also bribed a local bank employee to influence and reward the employee in connection with the submission and processing of PPP applications and the deposit and disbursement of PPP and EIDL funds into accounts at the bank.