Homeless man accused of $737K fraud in COVID-19 relief funds

A homeless man who allegedly founded a diabetes nonprofit, a web company and a crypto currency mining operation to fraudulently obtain $737,802 in Paycheck Protection Program funds and Economic Injury Disaster Loan funds made his initial appearance in federal court Friday.

Jeremy Koski, 44, of Hawaii and Washington, is facing charges of wire fraud and money laundering after he received loans authorized by Congress in the Coronavirus Aid, Relief, and Economic Security Act.

Koski is being held at the Federal Detention Center in Honolulu ahead of a detention hearing set for Wednesday before U.S. Magistrate Judge Rom A. Trader.

Records indicate that Koski lived and incorporated his Hawaii business from an emergency homeless shelter on Sumner Street where he lived from Feb. 15, 2019, until March 15, 2020. Businesses he founded in Washington used the address of the “Compass Housing Alliance, a service for homeless and low-income individuals,” where he was staying, according to federal court records.

It is not immediately clear what Koski did with the money.

Assistant U.S. Attorney Craig S. Nolan, who is prosecuting the case, declined comment. Assistant Federal Public Defender Sharron I. Rancourt did not immediately reply to Honolulu Star- Advertiser requests for comment.

According to records kept by the Business Registration Division of the state Department of Commerce and Consumer Affairs, Koski incorporated the Michael Marcum Diabetes Campaign, a domestic nonprofit corporation, in Kapaau on Aug. 28, 2019.

The nonprofit is not in good standing, according to state records, and had delinquent status for the years 2020, 2021 and 2022. On May 4, 2020, Koski submitted a PPP loan application in the name of MMDC that was approved and funded.

According to business records kept by the Washington secretary of state, Weblook LLC was formed by Koski in Washington on April 30, 2020. The company was deemed inactive on May 1, 2021, “and was administratively dissolved on or about September 3, 2021 by the WSOS,” according to federal court records.

During the spring of 2020, Koski submitted a PPP loan application and an EIDL loan application in the name of Weblook that were approved and funded.

Koski also created BTC Miner Inc., a crypto currency mining website, in Washington on Oct. 23, 2014.

The company was “administratively dissolved” on Feb. 1, 2016, and was reinstated on April 29, 2020, before finally being deemed inactive on Nov. 1, 2020, and administratively dissolved on March 3, 2021. Koski allegedly submitted an application for an EIDL loan in spring 2020 that was approved and funded.

According to an affidavit authored by a special agent with the U.S. Small Business Administration, Office of Inspector General, on May 4, 2020, Koski electronically submitted a PPP loan application to an approved SBA lender in the name of MMDC asking for “$285,502 in PPP funds, and identifying himself as the 100% owner.” He eventually received the funds.

Koski provided a photo of his Washington driver’s license as part of the application and allegedly represented that MMDC had 20 employees and an average monthly payroll of $114,201, and said he needed the money to pay his workers.

He also allegedly answered “no” to a question of whether he had other businesses, which he would have been required by law to disclose.

As additional support for the PPP application, Koski allegedly “submitted documents purporting to be Internal Revenue Serv­ice Forms 941 (Employer’s Quarterly Federal Tax Return) for the first, second, third, and fourth quarters of 2019 for MMDC” that listed an address on Merchant Street in Honolulu.

The address is actually a post office box.

Koski allegedly signed each form claiming that MMDC had 20 employees with wages totaling $342,603 for each quarter.

According to the IRS, MMDC did not file any such forms for tax years 2019 and 2020, and the forms Koski submitted to the lender “appear to be fabricated,” according to the affidavit. Koski allegedly claimed the money was to pay “to retain workers, maintain payroll or make mortgage interest payments, lease payments and utility payments.”

On May 18, 2020, Koski allegedly submitted a PPP loan application from an IP address in Hawaii asking for $187,500 to support his Kirkland, Wash.-based Weblook’s “20 employees and an average monthly payroll of $75,000.” As with the diabetes nonprofit, Koski allegedly submitted IRS forms that claimed he had “20 employees with wages totaling $342,603 for each quarter.”

Those forms were also allegedly fake, and the IRS has no record of them.

After receiving the $187,500 in PPP funding, Koski between April 1 and June 7, 2020, allegedly submitted an EIDL application online from an IP address in Hawaii for Weblook claiming it had “five employees as of January 31, 2020, and gross income of $5,500,000 for the year ending January 31, 2020.”

On June 10, 2020, Weblook got $149,900 from the SBA after his EIDL application was approved.

Between May 7 and June 24, 2020, from a computer in Hawaii, Koski allegedly submitted to the SBA an EIDL application in the name of BTC Miner Inc. asking for $115,000.

Koski allegedly claimed BTCM had 20 employees as of Jan. 31, 2020, and gross income of $1,500,000 for the same year.

The IRS had no records related to the claims Koski made. On June 26, 2020, BTCM received $114,900 from the SBA.

Koski allegedly transferred the money he got for his businesses into a First Hawaiian Bank account and a Bank of the Orient account in his name.