An Edina man fraudulently collected nearly $1 million in COVID-19 relief funds meant to keep small businesses afloat during the early stages of the pandemic, according to federal charges.
Mark Erjavec, 49, was indicted in U.S. District Court on Tuesday with five counts of wire fraud alleging he illicitly obtained proceeds from the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) policies meant to help small businesses during the pandemic. Erjavec appeared in federal court Tuesday and was ordered released on bond. He did not have an attorney listed in court filings Tuesday afternoon.
The indictment alleges that from April to August 2020, Erjavec — while living in Denver — reactivated several of his Minnesota businesses he had owned more than 20 years ago. The businesses, mostly financial entities, were dissolved by the Minnesota Secretary of State from 2008 to 2013. Through the reinvigorated companies, Erjavec is accused of submitting applications to the federal programs by claiming nonexistent employees, overstating revenues and fabricating tax forms.
The indictment noted the amount of EIDL funds disbursed to businesses were based in part by a company’s employment, revenue and cost of goods sold. PPP loan applications also required small businesses to state average payroll expenses and number of employees.
Erjavec’s businesses, prosecutors wrote, “had no significant sources of income outside of EIDL loan proceeds and very limited business-like transactions.” Erjavec opened new checking accounts for the companies often on the same day, or within days, that he re-registered his business, the indictment alleges.
Erjavec received more than $975,000 in pandemic relief funds that he wired into bank accounts he controlled and used the money for personal spending, the indictment said.
“When Minnesotans were struggling to keep their doors open and pay their workers, Erjavec lined his own pockets. Fraud that exploits a crisis is especially shameful,” acting U.S. Attorney Joe Thompson said in a statement.
