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Friday, 9 October 2020

Florida rapper pocketed more than $1million in COVID-19 relief funds to purchase a Ferrari and Versace goods as part of a $24million fraud scheme, officials say

 A South Florida rapper allegedly falsified documents and obtained more than $1million in a fraud scheme that sought $24million in federal COVID-19 relief aid.

Diamond Blue Smith, a member of the R&B group Pretty Ricky, was arrested on Monday and appeared before a magistrate in the Northern District of Georgia.

Smith, of Miramar, Florida, was nabbed  two days after his co-conspirator, Tonye C. Johnson, who was taken into custody in the Eastern District of Pennsylvania.

'The complaints, which were unsealed today, allege that Smith and Johnson conspired with others to obtain millions of dollars in fraudulent PPP loans,' said a press release from the Department of Justice.  

Diamond Blue Smith (pictured), of Pretty Rick and Love and Hip Hop: Miami, was arrested and appeared before a magistrate in the Northern District of Georgia on Monday

Diamond Blue Smith (pictured), of Pretty Rick and Love and Hip Hop: Miami, was arrested and appeared before a magistrate in the Northern District of Georgia on Monday 

Prosecutors have accused the 'Love and Hip Hop: Miami' star of obtaining fraudulent loans from the Paycheck Protection Program launched during the pandemic.

'Smith, a recording artist, is alleged to have obtained a PPP loan of $426,717 for his company, Throwbackjersey.com LLC, using falsified documents,' the press release said.

'Upon completion of that loan, Smith then sought and obtained another PPP loan of $708,065 for his other company, Blue Star Records LLC, using falsified documents.'

Smith, also known by his stage name 'Baby Blue', allegedly used that money to purchase a $96,000 Ferrari and other luxurious items.

Prosecutors alleged that Smith used a portion of his PPP loan money to purchase a Ferrari and other luxurious items. Pictured: a Ferrari F50

Prosecutors alleged that Smith used a portion of his PPP loan money to purchase a Ferrari and other luxurious items. Pictured: a Ferrari F50 

According to court documents viewed by DailyMail.com, the 36-year-old allegedly spent $27,176 at the Seminole Hard Rock Hotel and Casino on July 6.

In June, he allegedly spent $2,290 on various Versace goods, and from May to August withdrew an estimated $271,805 in alleged loan proceeds.

Authorities seized the Ferrari when Smith was arrested on Monday.

Furthermore, prosecutors claimed that Smith pursued PPP loans on behalf of others in order to receive kickbacks from them.

'The conspirators in the scheme planned or prepared at least 90 fraudulent applications,most of which were submitted,' court docuemnts said.  

Based on evidence, prosecutors said that an estimated 42 of all the total loans were approved, equalling to $17.4million.


'Certain of those loan recipients then wired a kickback of varying amounts, often approximately 25% of the fraudulent loan proceeds, to an account controlled by [a defendant], documents read. 

Meanwhile, Johnson allegedly obtained $389,627 for his company, Synergy Towing & Transport LLC, using falsified documents. 

Johnson allegedly paid a portion of the loan proceeds to co-conspirators in the COVID-19 aid scheme.

'Early in their scheme, Smith and Johnson’s co-conspirator, Phillip J. Augustin, allegedly obtained a fraudulent PPP loan for his talent management company using falsified documents,' the press release said.

Then, Augustin branched out and began involving other co-conspirators to receive kickbacks.

Pictured: Diamond Blue Smith (left) with his Pretty Ricky bandmates onstage at MTV's Total Request Live event on August 13

Pictured: Diamond Blue Smith (left) with his Pretty Ricky bandmates onstage at MTV's Total Request Live event on August 13

In total, 11 men and women from Florida to Ohio were charged in one of the largest COVID-19 relief aid schemes to date.

Both Smith and Johnson were charged in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud. 

Court documents said that Smith was given a $250,000 unsecured bond and he was released from custody.

PPP loans, provided under The CARES Act of March, were designed to provide financial relief to small businesses affected by the pandemic.

In April, Congress approved more than $300billion in additional PPP funding. As part of the program the money is required to go towards certain business finances.

Pictured: Blue Diamond Smith, also known as Baby Blue of Pretty Ricky
Pictured: Blue Diamond Smith, also known as Baby Blue of Pretty Ricky

Smith (left and right) allegedly connected the fraudulent PPP loans to his two businesses, Throwbackjersey.com LLC and Blue Star Records LLC

'PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities,' the press release said.  

New unemployment claims in Florida topped 42,000 for the week that ended October 3. The pandemic forced entire industries, small businessses and other to close up shop earlier this year.

Florida struggled to curb COVID-19 cases when cases picked up this summer and, although not as high, have continued to record concerning numbers. 

For example, on Tuesday Florida recorded 2,519 cases - compared to 105 cases counted in the former epicenter, New York City. 

Florida has amassed 726,013 infections and 15,086 deaths since March. 

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