A Rockport man pleaded guilty Wednesday in U.S. District Court in Portland to a bank fraud scheme in which he filed nine fraudulent Paycheck Protection Program loan applications and received more than $1 million.
Mark X. Haley II, 42, filed fraudulent PPP loan applications at two banks for businesses he controlled, the U.S. Attorney’s Office said.
Mark X. Haley
Haley listed false employee and payroll information on each application and submitted fraudulent documents to support the false information to the banks. The documents included false federal employment tax returns, fake time sheets and falsified bank records. As a result of the scheme, Haley fraudulently obtained $1,010,581 in PPP funds, the U.S. attorney said. He used some of the funds to make a down payment on a sailboat.
Haley faces up to 30 years in prison, a $1 million fine and up to five years of supervised release. Haley will be sentenced after the completion of a pre-sentence investigation report by the U.S. Probation Office. He remains free pending sentencing.
The Internal Revenue Service, Criminal Investigations investigated the case.
“While many legitimate businesses used PPP loans to keep their businesses afloat, Mark Haley, motivated by personal greed, set his sails on a scheme to obtain lavish luxuries,” Joleen Simpson, special agent in charge of IRS’ Criminal Investigation’s Boston Field Office said in a statement issued by the U.S. Attorney’s Office. “Today’s plea should serve as a stark reminder that criminals, such as Haley, will be held accountable for their misdeeds.”
The Paycheck Protection Plan was a COVID-19 pandemic relief program administered by the Small Business Administration that provided forgivable loans to small businesses for job retention and certain other expenses. The PPP permitted participating third-party lenders to approve and disburse SBA-backed PPP loans to cover payroll, fixed debts, utilities, rent/mortgage, accounts payable and other bills incurred by qualifying businesses during, and resulting from, the COVID-19 pandemic. PPP loans were fully guaranteed by the SBA.
ALSO FACING LAWSUIT
Haley is also being sued in the Knox County court in Rockland by Rachel Klotz of Rockport, who accuses him of defrauding her of at least $3 million.
The lawsuit was filed Oct. 21 against Haley and LLCs he created: Burntcoat Capital, Boyaca Trading Company, MHRK Investments, Burntcoat – Flybridg, Burntcoat – Highbyte, Burntcoat – Kinotek, GME Holdco, Bellamy Eagle, Burntcoat Simpletrade, Eastern Investment Advisors, Honduras Imports, J 100 X, One7Seven Productions, Dashii Foods, Xavier Food Groups and Secure Capital Management.
The lawsuit alleges that Haley and Klotz met in Maine in 2019 and began a romantic relationship. Over the course of the next three years, the lawsuit alleges that Haley induced Klotz, through fraudulent misrepresentations, to transfer large amounts of money – totaling $1.1 million – to him on the claim that he could get better returns on her investments. Klotz also loaned $500,000 to Haley after he promised to repay her in three days with what he said would be from proceeds of a Small Business Administration loan that he was set to receive, the lawsuit states. The $500,000 loan was never repaid, the lawsuit states.
She also purchased a $100,000 Land Rover Defender, which he possesses and has not returned to her, according to the lawsuit.
The two jointly own a home in Rockport. Klotz paid half down for the house and he promised to pay the other half but was unable to get a loan, according to the lawsuit.
Answers to the allegations were filed in court by his attorney Walter McKee of Augusta, denying all the claims.
Messages left with Haley in October were not returned.
Klotz learned of the potential fraud in August 2022 when Internal Revenue Service agents went to her home and advised her that Haley was being investigated for Paycheck Protection Program fraud, the lawsuit states. Haley had listed Klotz and her family members as employees of the limited liability companies in order to get the $1.2 million in federal aid, according to the lawsuit. Klotz and her family were never employees of the LLCs that he created in Delaware, according to the lawsuit.
A review of the federal government’s Paycheck Protection Program website shows that seven of the LLCs listed in the lawsuit received PPP loans. The companies all have an address of the home that Haley and Klotz jointly own on Mill Street in Rockport.
One of the companies claims to be a soft drink manufacturer with seven employees, another is a fresh fruit and vegetable wholesaler with eight employees, and others are investment advisers with seven to nine employees. The loans were received in February and March 2021, according to the federal website.
Haley was vice chair of the Rockport Planning Board but resigned that post after the lawsuit was filed. He also resigned as chair of the board of directors of the Maine Ocean School Foundation in Searsport. He also served on the board of United Midcoast Charities from December 2021 until late summer 2022, resigning before the lawsuit was filed.
Haley’s biography when he joined the UMC Board in December 2021 stated Haley was the “founder of Burntcoat Capital, a private investment fund focused on socially and environmentally responsible opportunities. His passions are surfing, sailing, fishing and aquaculture. He has family roots in Maine, having spent summers on Swan’s Island.”
His biography on the Maine Ocean School Foundation states he has experience is in finance, private equity and real estate investments. “He is also an entrepreneur. Mark currently sits on the board of several portfolio companies and nonprofits,” the Foundation’s website states. The Foundation raises money for the not-for-profit charter school in Searsport.
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