Manassas businessman pleads guilty to stealing $7M in COVID-19 relief funds

By Cher Muzyk Times sTaff WriTer

A Manassas business owner and a Bealeton man pleaded guilty Friday to conspiring to defraud banks and the federal Small Business Administration of more than $7 million in COVID-19 relief funds – money that was used to invest in cryptocurrency, buy vehicles, make mortgage payments, fund home renovations, pay private high school and college tuition bills and buy items on Amazon, according to court documents.

Between April 2020 and March 2021, Bennie Earl Magee, 54, of Manassas, falsified payroll records, created fake IRS business tax returns and submitted falsified revenue reports of multiple companies to lenders and the SBA to obtain more than $7 million in Paycheck Protection Program and Economic Injury Disaster Loans for himself and his friend and co-defendant Michael Gilcher, 45, of Bealeton, according to court documents.

Magee created fraudulent loan applications using falsified documents for his and Gilcher’s companies on his computer and applied online from his home office in Manassas, court records said.

The two pleaded guilty on Friday, May 26 before Senior U.S. District Judge Claude M. Hilton at the United States District Court for the Eastern District of Virginia, according to court documents.

Magee and Gilcher lost a substantial portion of the money they obtained through fraud in a failed cryptocurrency venture, court documents said.

Magee’s scheme to defraud caused TD Bank to disburse a total of $6,765,379 in PPP loans and the SBA to issue $854,000 in EIDL loans, for a total actual loss of $7,619,379. Magee personally stole over $5 million in the fraud scheme. Gilcher obtained about $1.4 million in COVID-19 relief funds but wrote checks back to one of Magee’s companies totaling approximately $620,000, according to court documents.

Magee put himself, Gilcher and at least one of his children on the payroll. Magee used Intuit QuickBooks payroll to pay himself and family members tens of thousands of dollars, court documents said.

In addition to the cryptocurrency investments, Magee paid tuition for his children at a private secondary school and a private university. Magee made home renovations, bought vehicles and invested in stocks using E-Trade. Magee also used PPP funds to make mortgage payments on his home, which was in pre-foreclosure prior to his securing the PPP funds, according to court documents.

When applying for the pandemic relief funds, Magee vastly inflated the numbers of employees and gross revenues for each of his business entities, which included “Bounce Mania,” an indoor children’s playground in Gainesville featuring multiple inflatables that closed in 2018.

Magee’s other business interests included Infinity Solutions Group

LLC, United Sportsplex LLC, Cleverfuze LLC, United Basketball Association LLC, Bull Run Capital Investments LLC, United Futsal League LLC, Onyx Special Police LLC, United Health & Rehabilitation Center LLC and Gifted Hands Moving Company LLC, according to court records.

Magee also applied for funds for the Minority Owned Business Coalition, Inc., which according to its website, he founded in May 2013 as a “community-based membership 501(c)(3) nonprofit organization … on the basis of empowering underserved communities.”

Magee also falsely represented the number of employees and payroll at the nonprofit, court records said.

Gilcher ran his own company called Infinity Communications Solutions LLC, which initially was incorporated in Ohio and had annual revenue of approximately $20,000 in 2019 and 2020. Other than Gilcher, ICS had no employees and no payroll. ICS did unpaid internal information technology projects for Magee, court records said.

After Magee discussed applying for EIDL and PPP loans with Gilcher on behalf of ICS, around May 2020, Gilcher and Magee incorporated ICS in Virginia. Magee created false payroll information for ICS, ballooning its employee rolls to 46 people with Gilcher’s knowledge and approval. The names of at least 26 real people were used without their consent or lawful authority, according to court papers.

Gilcher made a $48,563 cash withdrawal of the funds on July 17, 2020, and used PPP funds to make substantial mortgage payments and purchase items from Amazon, according to court papers.

The cases against Magee and Gilcher were investigated by the Pandemic Response Accountability Committee Fraud Task Force, which was established to promote transparency and facilitate coordinated oversight of the federal government’s COVID-19 pandemic response by detecting fraud, waste, abuse and mismanagement in the more than $5 trillion in COVID-19 spending. The Office of the Special Inspector General for Pandemic Recovery assisted with the investigation of this case, according to the U.S. Attorney’s Office of the Eastern District of Virginia.

Magee faces up to 20 years in prison. Gilcher faces up to five years in prison. Both Magee and Gilcher were released on bond with several conditions and are to have no contact with each other while they await their sentencing on Aug. 25.

Requests for comment from Magee’s counsel, Stuart Sears, and Gilcher’s counsel, Christopher Leibig, were not immediately returned.

Reach Cher Muzyk at cmuzyk@ fauquier.com