U.S. Attorney Philip Sellinger announced this week that the third of three Perth Amboy individuals pleaded guilty for his role in a $2.1 million COVID-related fraudulent scheme.

In Trenton federal court Oct. 11, Arlen Encarnacion, 37, pleaded guilty to a two-count information charging him with conspiracy to commit wire fraud and money laundering. Two co-conspirators, Jacquelyn Pena, 37, and Kent Encarnacion, 30, separately pleaded guilty to informations charging them with those same two counts Aug. 8.

According to prosecutors, Arlen Encarnacion submitted 11 fraudulent federal Paycheck Protection Program (PPP) loan applications and three fraudulent Economic Injury Disaster Loans (EIDL) applications on behalf of purported businesses. They also alleged that Kent Encarnacion helped submit one of the other sham PPP applications, while Pena helped submit three of the other fraudulent PPP applications.

“Each application contained false representations, including bogus federal tax return documentation and fabricated information about the number of employees and wages paid,” according to case documents and court statements released by prosecutors. “Based on these alleged misrepresentations, lenders, Federal Home Loan Bank members, and the Small Business Administration collectively provided the purported businesses with approximately $2.1 million in federal COVID-19 emergency relief funds meant for distressed small businesses. Arlen Encarnacion received the bulk of the fraudulent proceeds, and together with Kent Encarnacion and Pena, they misappropriated all of the funds.”

“Enormous amounts of financial relief went to those Americans who were struggling with this unprecedented pandemic, but, sadly, a number of people saw this difficult time as an opportunity to enrich themselves illicitly,” said Sellinger. “Our office is focused on combatting all types of fraud, especially when it involves exploiting the suffering of others.”

The count of conspiracy to commit wire fraud carries a maximum penalty of 20 years in prison, while the money laundering count carries a maximum penalty of 10 years in prison. Both counts carry a maximum fine of $250,000 or twice the gross gain to the defendant or gross loss to the victim – whichever is greatest.

Kent Encarnacion is scheduled to be sentenced Dec. 12, 2023; Pena on Dec. 13, 2023; and Arlen Encarnacion on Feb. 13, 2024.

“IRS Criminal Investigations and our law enforcement partners will not tolerate criminal exploitation of this national emergency for personal gain,” said Tammy Tomlins, special agent-in-charge, IRS – Criminal Investigation, Newark Field Office. “Today’s plea sends a clear message that we remain vigilant and will vigorously pursue those who attempt to enrich themselves through fraudulent means.”

See also:

• State penalizes South Jersey contractor accused of defrauding seniors
• Jersey City attorney admits to defrauding clients
• Mercer man admits role in COVID testing kickback scheme