According to the front page story appearing in the New York Times April 26 edition, hundreds of millions of dollars intended by the US Treasury to assist small businesses impacted by CIVID-19 via the Paycheck Protection Program have been siphoned off by public companies, private equity-backed companies. What a surprise, millions have gone to scamsters and fraud artists, including those who have been recently indicted or under investigation by federal law enforcement and federal and state regulatory agencies.
Shocking?! Nah. According to one senior investigator from The Financial Crimes Enforcement Network (FinCEN) “However well-intended, the PPP program created the perfect opportunity for serial financial fraud artists to exploit loopholes that a teenager could drive a Boeing jet through.”
In addition to the assortment of rogues that were outed in the above-referenced NYT coverage, it appears that individuals running a so-called fintech company called Seaquake.io, which claims to “specialize in digital asset infrastructure” and profiled here and other online media outlets back in October, are back at it again.
Informed sources have indicated having direct knowledge that Seaquake principals Andrew Katz and Matthew Krueger, who have been cited in federal court for an assortment of investor fraud and wire fraud allegations, have recently filed Covid-19 PPP loan applications for as many as six different Seaquake entities, including Colorado-registered Seaquake Inc., Seaquake Manager LLC, Seaquake LP, and a California entity Seaquake Capital LP. Each of these entities list both Andrew R. Katz and Matthew Krueger as controlling officers. AVEM Ventures LLC, a Colorado entity identified along with each of the above in a federal civil court action, lists Katz as the controlling officer and a Kenneth S. Katz as the registered agent. This entity is also believed to have applied for loans and grants intended for businesses that have been impaired by the COVID-19 pandemic.
There is only one problem, according to a former business development executive for Seaquake, who worked for the company while he was also registered with Finra as a senior executive for a San Francisco based brokerdealer. According to sources, that employee has stated that Seaquake is not a real business, the product(s) they claim to have is “nothing more than vaporware”, they have no employees (other than Katz, Krueger and UK-based Dylan Knight who is listed as the chief technology officer on corporate documents), all despite claims made on the company website and representations made in an assortment of investor solicitation documents the company has sent to dozens of individuals and fund managers.
Katz, who was pictured on Instagram in December while vacationing at a resort in Cabo along with his aspiring swim suit model wife (a Turkish national whose immigration status remains undetermined). In early March, the couple was spotted posing for photos on the beach in Southampton, New York. It is rumored that Katz is now hiding out in New York City. Neither he or his San Francisco-based partner Krueger, both accused of defrauding a Florida-based family office this past August, have made themselves available for comment.
The San Francisco branch of BBVA Compass Bank, the bank of record for an assortment of Seaquake enterprises, had no comment has to whether they facilitated loan processing or payments to the Seaquake’s alleged criminal enterprise.
One can only hope that FBI and SEC efforts lead to a long-term quarantine for these individuals.