Kentucky man sentenced to more than $1.3 million in fraudulent COVID loans | New

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LEXINGTON, Ky. — A Central Kentucky businessman who submitted false information to receive $1.3 million in coronavirus relief loans and used some of it for gambling debts has been sentenced to three years and six months in federal prison.

Randall “Rocky” Blankenship Jr. must also pay a $30,000 fine, according to a press release from the office of U.S. Attorney Carlton S. Shier IV.

U.S. District Judge Karen C. Caldwell sentenced Blankenship on Thursday. He had pleaded guilty to a charge of conspiracy to commit wire fraud.

Blankenship, 49, of Versailles, operated a business called KY Bluegrass RV and Camping LLC, but also owned four front companies, court records show.

The front companies were Blankenship RV Finance Solutions LLC, RSGG Properties LLC, RSGG Holdings LLC and RSGG Investments LLC.

Those companies had no employees, but Blankenship claimed they did and used them to apply for four loans under the Paycheck Protection Program, or PPP.

It was a program Congress rushed into in March 2020 to help businesses weather the economic downturn resulting from the coronavirus pandemic. The loans were intended to keep employees on the payroll and were designed to be canceled if the recipient used them for an approved purpose.

With the help of an accountant, Blankenship created false documents showing payroll costs totaling $1,323,829 at the companies, when in fact they had no payroll costs, according to his plea agreement.

Blankenship had already secured a $750,000 PPP loan for his RV sales business, so he was not eligible for another loan under the program at that time, according to a court document.

“This crime of wire fraud was a brazen and cynical seizure of money by a greedy businessman…” the prosecutor, Assistant U.S. Attorney Paul McCaffrey, said in a sentencing memorandum. “While some small businesses saw a financial lifeline in these PPP loans, the defendant saw a criminal opportunity.”

The memo said the fraud hurt other small businesses because at the time Blankenship got the loans, the PPP program only allowed one loan per business and it was on a first-come, first-served basis. .

Blankenship used the money from the fraudulent loans for various purposes, including checks for himself; $306,000 for a vacation property in South Carolina; $134,000 for improvements to farmland he owned; and to “feed his insatiable gambling habit,” according to the memo.

Attachments to the memo included a check for $100,000 to Belterra Casino on the Ohio River.

McCaffrey said that in the last half of 2021, Blankenship also convinced customers to trade in their used RVs for newer ones, promising it would refund any existing liens on their old vehicle, but then told the employees not to refund the liens.

At least 10 customers were burned in the scam, with balances totaling more than $365,000, according to the memo.

“At the same time, the defendant was lying to customers and keeping money he was not entitled to, writing bad checks and markers to Nevada casinos, incurring at least $325,000 in gambling debts nothing than in Las Vegas,” McCaffrey wrote.

Blankenship eventually sold its business and repaid the $1.3 million in PPP loans and liens on customers’ vehicles, according to the memo.

A Nicholasville accountant, Tammy Jo Goodwin, pleaded guilty last month to participating in the scheme with Blankenship.

Blankenship paid him several thousand dollars to help him set up fake payroll records, according to his plea agreement.

She is expected to be sentenced in September.

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