A Brighton man who operates Boston-area food trucks used more than $1.5 million in federal pandemic-relief funds to bet on the stock market, rather than on paying workers and other steps to keep his business afloat, the US Attorney's office charges, in a wire-fraud complaint filed in Boston federal court yesterday.
According to an affidavit by an FBI agent on the case, Loc Vo, 55, was granted money from the Economic Injury Disaster Loan program, the Paycheck Protection Program and the Restaurant Revitalization Fund for his Smart Gourmet company, based on his statements that Smart Gourmet recorded $1.6 million in gross receipts in 2019 and had about 20 employees. All three funds were meant to help small businesses survive the pandemic by giving recipients money to pay their business's bills and payroll. The restaurant fund, from which Vo got $967,000, was meant to help with general business costs but also restaurant-specific expenses, such as the cost of food, equipment and even outdoor seating.
But instead of putting the money into Smart Gourmet, the affidavit states, Vo promptly transferred most of the funds into E-Trade and Robinhood accounts that he then used to buy shares in biotech, Web and financial services, electric-car and gaming companies.
In addition to the loans and grants to Smart Gourmet, the affidavit states, Vo also got a PPP grant for a Virginian company that he claimed had 14 employees, even though it went defunct in 2002, according to the affidavit, which states that when he got that money, he transferred it to a Smart Gourmet account.
As one example of what he did, the affidavit states that on July 1, 2020, the SBA wired $149,900 in EIDL funds - meant to be working capital for his company - to Vo's Bank of America account. On July 3 and July 6, Vo transferred $143,000 to an E-Trade account. Later on July 6, the affidavit states, Vo used the E-Trade account to buy $115,000 worth of shares in a biotech company.
The affidavit states that when agents interviewed Vo in December, he told them many of the payments he made to his 20 workers were not reflected in his bookkeeping or tax statements and that he used the federal pandemic payments in large part to to repay family members and friends in Vietnam who had loaned him money to keep his business afloat. The FBI agent did not buy that:
My review of records from Vo's E-Trade and Robinhood accounts shows primarily trading activity that began following the accounts' receipt of PPP and other pandemic funds. Contrary to Vo's statement to investigators, it does not show withdrawal activity consistent with repayment to others.
Complete affidavit (4.2M PDF).