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NJ Business Owner, Daniel Dadoun, Charged in $3.2M Covid PPP Fraud Scheme Retains Famed Atty Ben Brafman as Legal Counsel
Edited by: TJVNews.com
Back in December of 2023, the Jewish Voice reported that an owner of several New Jersey businesses was charged with fraudulently obtaining over $3.2 million in federal Paycheck Protection Program (PPP) loans, U.S. Attorney Philip R. Sellinger announced on November 15th.
Daniel Dadoun, 47, formerly of South Plainfield, New Jersey, and who holds French, Canadian and Israeli passports, was charged by complaint with four counts of bank fraud and two counts of transacting in criminal proceeds. Dadoun made his initial appearance on Nov. 13, 2023, before U.S. Magistrate Judge André M. Espinosa in Newark federal court and was detained.
“The allegations in this complaint describe the falsifying of documents in order to secure loans and then submitting fraudulent documents to have those loans forgiven. These programs were designed to help Americans struggling through the pandemic. Our office will combat this type of fraud whenever we encounter it, “ said US Attorney Philip Sellinger.
“Daniel Dadoun is alleged to have engaged in COVID-19 Paycheck Protection Program (PPP) fraud for personal gain without any regard for the United States taxpayer and undermined the public trust in government programs,” Homeland Security Investigations (HSI) Newark Acting Special Agent in Charge Michael Alfonso said. “HSI takes allegations of fraud seriously and will continue to pursue these crimes vigorously.”
“It is not only alleged that Dadoun defrauded the Paycheck Protection Program by submitting false loan applications, but he anted up the game by submitting fraudulent loan forgiveness applications,” Thomas M. Fattorusso, Special Agent in Charge of IRS-CI New York, said. “Dadoun may have known how to work the benefit system for his own financial gain, but now it’s law enforcement and the judicial system that will work to hold him accountable for his crimes.”
Dadoun is currently incarcerated and awaiting trial, while attempting to gain release on bail. He has retained famed criminal attorney Benjamin Brafman as legal counsel , according to sources familiar with the matter.
According to documents filed in this case and statements made in court:
From April 2020 through August 2022, Dadoun engaged in a scheme to illegally obtain over $3.2 million in PPP loans on behalf of businesses located in New Jersey by submitting false and fraudulent loan applications. After receiving the PPP loan proceeds, Dadoun sought to keep the money by submitting false and fraudulent PPP loan forgiveness applications. The loan applications misrepresented information about the companies, including the number of employees and payroll expenses. In support of the loan applications and subsequent applications for loan forgiveness, Dadoun submitted falsified tax documents, altered and falsified bank statements, an altered and falsified lease agreement, and a false letter purportedly signed by a New Jersey accountant.
The charges of bank fraud each carry a maximum penalty of 30 years in prison and a maximum fine of $1 million, or twice the gross gain to the defendant or gross loss to the victim, whichever is greatest. The charges of transacting in criminal proceeds each carry a maximum penalty of 10 years in prison and a maximum fine of $250,000, or twice the gross gain to the defendant or gross loss to the victim, or twice the amount of criminally derived property involved in the transaction, whichever is greatest.
According to a November 15th report on the NJ.com web site, Dadoun’s businesses listed in the federal complaint include DG Distriservices of Perth Amboy, Seldat Distribution in South Plainfield and a redevelopment company, 200 South Pemberton Urban Renewal registered in Perth Amboy, authorities said.
Seldat Distribution was also associated with two other companies linked to Dadoun that received PPP money, Seldat Staffing and Seldat Fashion, according to the NJ.com report.
Dadoun withdrew the loans from three banks and funneled money to personal and business accounts, at least two of which were overseas in Vietnam and Canada, authorities said, as was noted in the NJ.com report. Prosecutors also said Dadoun inflated payroll figures in at least one case by almost $700,000.
The largest loan in the scheme of over $2 million was taken from a bank headquartered in Cherry Hill.
The report on the NJ.com web site also said that Dadoun requested a $2.1 million loan on behalf of Seldat Distribution which claimed to have approximately 400 employees when in actuality IRS records indicated the company had only 97 employees, authorities said.
According to a July 30, 2019 report that appeared on the Burlington County Times web site, Seldat Distribution said that its proposed warehouse would bring jobs to the area but has faced multiple employment violations in recent years, including those filed after the near-fatal electrocution of an employee.
The Burlington County Times reported in 2019 that Seldat proposed building a 509,000-square-foot facility on 29 acres inside the redevelopment area on South Pemberton Road, according to the township. The warehouse would be a hub for the distribution of products to retail outlets, and could bring 100-150 jobs to the region, the company’s attorneys told the paper at the time.
But the quality of those jobs was called into question by Craig Garcia, a labor-rights activist, according to the Burlington County Times report.
The report continued by saying that Garcia expressed his concerns in an email to Mayor David Patriarca in July of that year.
“Seldat appears to have a long history of misclassifying its warehouse workers as independent contractors, and thus failing to pay taxes on their work and leaving the workers to pay heavy taxes on low wages,” said Garcia, director of worker organizing at Make the Road NJ. The company also has had issues “related to wage and hour claims” and has a “problematic workplace health and safety” record, he said, as was reported by the Burlington County Times.
The paper also reported that concerning Seldat, Department of Labor records show employment complaints about unpaid wages and minimum-wage violations going back to 2013. Those complaints resulted in payments and fees of more than $16,000.
The 2019 report also indicated that records show the New Jersey Department of Labor and Workforce Development has filed multiple violations against Seldat. The company also faces a number of lawsuits for its employment practices.
Perhaps the most dramatic and public employment incident occurred in 2014, when a worker at a South Brunswick Seldat Distribution warehouse was nearly electrocuted, as was noted in the Burlington County Times report. First responders found the man unconscious when they arrived, but were able to resuscitate him.
When Dadoun was questioned about the incident he told police the man had suffered a heart attack. Later, though, he admitted, the near-fatal electrocution was caused by wiring in the facility, and was charged with obstructing justice, according to the 2019 report in the Burlington County Times.
The Jewish Voice made repeated attempts to contact Daniel Dadoun on his numerous cell phone numbers for his comments on this matter but he failed to respond to the calls.
U.S. Attorney Sellinger credited special agents Homeland Security Investigations Newark, under the direction of Acting Special Agent in Charge Alfonso; special agents of IRS – Criminal Investigation, New York Field Office, under direction of Special Agent in Charge Thomas M. Fattorusso Jr.; special agents of the Social Security Administration – Office of the Inspector General, New York Field Division, under the direction of Special Agent in Charge Sharon Mac Dermott; special agents of the U.S. Attorney’s Office for the District of New Jersey, under the direction of Special Agent in Charge Thomas Mahoney; and the Canada Revenue Agency with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Katherine M. Romano of the U.S. Attorney’s Office Health Care Fraud Unit in Newark.
The District of New Jersey COVID-19 Fraud Enforcement Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.
The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
