Smithtown Man Admits To $1M Coronavirus Fraud: Feds

CENTRAL ISLIP, NY — A Smithtown man pleaded guilty to wire fraud after he fraudulently received approximately $1.1 million in small business disaster relief loans during the coronavirus pandemic, the United States Department of Justice announced Thursday.

Carmine G. Agnello, 38, fraudulently received loans under the United States Small Business Administration’s Economic Injury Disaster Loan Program (EIDLP), federal officials said. When sentenced, Agnello faces up to 30 years in prison, as well as restitution totaling more than $940K and a fine of up to $2.2 million.

Agnello is the grandson of the late John Gotti, former boss of the Gambino organized crime family.

"Agnello allegedly used over $1 million in COVID relief funds for his own financial gain," said Daniel Brubaker, inspector in charge of the United States Postal Inspection Service's New York Division, in a news release. "Government money that was intended to assist struggling businesses during the COVID-19 pandemic. Postal inspectors will relentlessly pursue any individuals who scheme to defraud the government and steal taxpayer funds. We, along with our law enforcement partners, will not end this pursuit of justice until those who take advantage of the U.S. Mail to commit fraud are held fully accountable. Today’s guilty plea is proof of that fact."

Congress created the EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act, enacted on March 29, 2020, provided emergency financial aid to help with the economic effects of the pandemic. The EIDLP provided low-interest financing to small businesses, renters and homeowners in regions affected by declared disasters, according to the government.

Between April 2020 and November 2021, amid the COVID-19 pandemic, Agnello fraudulently applied for and received at least three EIDLP loans totaling approximately $1.1 million that he submitted on behalf of Crown Auto Parts & Recycling, a Jamaica, Queens-based business that he operated, court filings show.

As part of the scheme, Agnello submitted documentation to the Small Business Administration and financial institution responsible for disbursing the funds, that falsely claimed he had no criminal record, prosecutors said. Agnello had a 2018 misdemeanor conviction, investigators said.

Agnello also submitted false information about the number of employees that worked for Crown and the intended use of the loan proceeds, authorities said. Instead of using the funds for disaster relief, Agnello diverted them for his personal use, officials said. He invested approximately $420K in a cryptocurrency business, the DOJ said.

"This defendant shamefully used the public health and economic crisis of the COVID-19 pandemic as an opportunity to line his pockets with stolen funds," Breon Peace, United States Attorney for the Eastern District of New York, stated. "The reality is, those who engaged in blatant theft of taxpayer dollars intended to assist legitimate businesses and their employees during the COVID-19 pandemic should know that despite the passage of time, there is no free pass for their crimes, and they will be vigorously prosecuted by the Office."