NH man in PPP fraud has regrets — up to a point
In interview, Joshua Leavitt puts most blame on his partner
Joshua Leavitt, shown at the inn he owns in Strafford, NH, shortly before leaving to begin his 28-month sentence at the federal penitentiary in Lewiston, Pa. He pleaded guilty last year to fraud involving federal funds aimed at supporting businesses during the pandemic. (Photo by Allegra Boverman)
Before Joshua Leavitt started his 28-month sentence in federal prison in Lewisburg, Pa., for fraudulently obtaining pandemic relief funds, the self-described serial entrepreneur had a few things to say.
“I knew I inflated payroll a bit to keep the existing companies going,” he said. “However, it feels more than a little unbalanced to make me the poster child … when the government admits on its own to hundreds of billions of dollars in known losses to China alone.”
Leavitt, of Northwood, pleaded guilty last July for fraudulently taking $873,475.50 in Paycheck Protection Program and Economic Injury Disaster Loan (EIDL) funds, along with his partner, Pierre Rogers, who was earlier sentenced to 41 months.
Leavitt began serving his sentence on May 26. Rogers, also serving his sentence, did not respond to previous requests for comment. (Leavitt had previously declined to comment until shortly after his sentencing, when he contacted NH Business Review to be interviewed.)
35 loan applications
Leavitt and Rogers asked for a lot more than the amount they were sentenced for.
Leavitt applied for 35 PPP and EIDL loans for seven different companies, including Dark Matter Associates, a company that was allegedly dedicated to “COVID-19 Disaster Relief Loan Acquisition and Management,” said U.S. Attorney Jane Young, who prosecuted the case, in a press release.
All told, according to Young, the pair attempted to steal over $6 million. To inflate the loans, Leavitt generated false supporting documents, including fake tax filings. In one tax return for a company called Puro Trader Inc., he claimed payroll was over $1 million, but the return was never filed. In another, he submitted a fake return claiming Monticello Transnational had a payroll of $340,000 in the fourth quarter of 2020, when the payroll was only $9,000.
Leavitt won’t talk about the tax filings, but he freely admitted that what he did was wrong, though he claimed it was to achieve an appropriate goal: “We manufactured more activity than actually existed, mostly with those three companies my partner used. I didn’t submit the paperwork, nor sign for anything related to them, but I prepared the paperwork that he used. The concept was that he would use that money to make sure we kept our people paid and kept the lights on.”
Leavitt wanted to stress that the companies, at least the ones under his name, were legitimate, and they were on the right track.
“They (the government) shut the whole economy down because of a cold,” he said, which “was only harmful to those already at risk for serious health issues, something we now know was well understood by the government: The rest of us free-thinking, responsible adults should have been free to choose our own level of risk.”
That “cold” — Covid-19 — has killed 1.1 million people in the United States alone and nearly 7 million around the world.
Leavitt said he and Rogers go way back. Leavitt said he first knew Rogers while attending high school in Conway, and then when he finished his education in Concord. (Rogers was a few years ahead of him.) They went their separate ways, but they hooked up again at Alumni Ventures in Manchester. (Leavitt refused to name the company in the interview, but it is listed on both of their LinkedIn pages.)
Leavitt said he was the No. 6 employee at the venture capital firm as the company went from $4 million in assets under management to $240 million in three years. Leavitt and Rogers decided to go into business together, he said, first with a central online cigar brokerage that morphed into a wine business.
“We got individual producers on our platform to sell directly to consumers, to bypass the three-tier system,” he said. “It has never been done before in this way and was revolutionary to the industry.”
Leavitt said he was sure the operation was legitimate, and it was endorsed by attorneys who work for Anheuser-Busch.
They needed to raise a lot of money fast, but that is the way it is at many startups.
“At that scale, if you don’t capture enough capital, you will not reach the threshold to turn profitable,” he said. “It’s all about how fast you are bringing it in and how quickly you get it out the door by putting it to work to hit that $500,000 or $1 million in sales you need to be viable.”
After raising $750,000, they needed another $1 million, he said, and “by the end of February 2020 we had $1 million of verbal commitments, much of which we expected to close in 20 or 30 days. Then the government functionally shut the world down.”
Yes, he applied for “tons of loans but we didn’t expect them to all go through … nor were we going to accept more than one per company … we were well within the bounds of the law to loan-shop.”
The ‘high life’
While the companies were different, “we had a pool of employees … in various aspects,” he said. “They just got the one salary for their primary job from one source, and we accrued what was due to them for the work at the other companies to be paid as soon as possible — that was something we all did to bootstrap.”
While the companies he owned were legitimate, Rogers’ companies weren’t, he said. Still, “I allowed my partner to convince me of the full validity of these loans,” he said. “And at the end of the day, he took $250,000-plus to live the high life, while I made sure the funds I had control of went back to the company to keep the lights on and our people paid.”
He claimed he even put a quarter of a million of his own money in the business.
The “high life” meant expensive cars. Prosecutors charged Rogers used $107,800 to buy a 2011 Rolls-Royce. Leavitt said he knew about the purchase and agreed to it, but he said it was a way to help the business turn a profit.
The money from the businesses’ “hard asset liquid fund” that would be used to buy luxury goods would quickly appreciate in value, he said, but Rogers “drove the cars for his own personal use, and unfortunately, that wasn’t the plan.”
Rogers did flip the Rolls, and they actually made a small profit, and then bought a Porsche with the proceeds, said Leavitt, “and that car disappeared, and I have no knowledge what happened to it nor the funds received from its sale.”
After the pandemic money came through, the business revived, Leavitt claimed.
“I had $1 million in Chilean wine in a warehouse ready to come to America that had never been sold here before because of this new system, with Argentina and France lined up next,” he said.
In 2022, he claimed, the company had been in talks to sell a large piece of the company to the second-largest alcohol distributor in the U.S., “but when I was arrested, that all went away.”
After struggling, he said, he decided to cop a plea. “If it had not been for my help in securing the additional funds for my business partner and his subsequent actions with that money, I would have been in a much more defensible position, but I accepted what I did, which is why I made the plea.”
The lesson, he said, is “I should have listened to my gut. When you give into your fears, when you give into your base inclinations, it could lead you down the wrong path,” he said.
Leavitt faced a maximum of 30 years but received a 28-month sentence and two years of parole. Some of the prison time may be reduced for good behavior.