PPP Prosecutions Continue: Two More Arizona Cases

At this point, the alternative finance and commercial lending industry is practically numb to pandemic-era fraud. We’ve seen the fake tax documents, the phantom employees, and the millions of taxpayer dollars funneled into luxury cars and cryptocurrency.

Six years after the CARES Act, the PPP prosecutions have not slowed down. Two Arizona cases in three weeks make the point, and the second one is worth reading closely because it doesn't stop at pandemic relief.

Here are the facts on both.

Case One: United States v. Jamar Johnson

Jamar Johnson, 54, of Phoenix, was sentenced on August 18, 2026, by U.S. District Judge Sharad H. Desai to 15 months in prison, followed by three years of supervised release. He had previously pleaded guilty to wire fraud.

Johnson admitted submitting false applications to obtain PPP loans for his entity, CBL Worldwide II. On one application, he stated the company had 73 employees and more than $4.8 million in annual payroll expenses. The company had zero employees and no payroll expenses.

He received two PPP loans totaling $1,007,650.

The money went to cryptocurrency, a vehicle, and cosmetic dentistry. He was ordered to pay full restitution to the SBA.

Homeland Security Investigations conducted the investigation with substantial assistance from the SBA Office of Inspector General. The case number is 25-CR-00738-PHX-SHD.

Case Two: United States v. Rodney Rosenstein

Rodney Rosenstein, 58, of Huntington Beach, California, was ordered detained pending trial on Monday, August 31. A federal grand jury in Tucson returned a three-count indictment against him on August 12, filed under seal.

The counts:

• Count 1 - Conspiracy to commit bank fraud, 18 U.S.C. § 1349, tied to the PPP scheme.

• Count 2 - Conspiracy to commit bank fraud, § 1349, tied to what the indictment calls the phony rent roll scheme.

• Count 3 - Conspiracy to commit an offense against the United States, § 371, for false statements to influence a mortgage lending business.

There is also a forfeiture allegation. Three unindicted co-conspirators are referenced as A, B, and C.

Rosenstein is presumed innocent. Everything below is an allegation from the indictment.

The PPP piece

Between approximately May 2020 and April 2021, Rosenstein and his co-conspirators allegedly obtained $2,904,091 across 15 PPP loans, drawn from six SBA participating lenders: Pacific Western Bank (now Banc of California), Pacific Enterprise Bank (now United Business Bank), two Zions Bancorporation entities, Farmers & Merchants Bank of Long Beach, and Bank of Southern California (now California Bank of Commerce).

The method was document fabrication. Co-conspirator A allegedly created fake IRS Forms 941 and W-2s in the names of Rosenstein's business entities. Per the indictment, none of the W-2s were ever issued or filed with the IRS; the listed individuals were never paid the wages shown, and no tax was ever withheld. Some of the identities belonged to people who didn't exist. Others belonged to real people who never worked for any of the companies. Social Security numbers on the forms were either invalid or falsely attributed.

The indictment is specific about why that mattered: PPP loan amounts were generally calculated at 2.5 times average monthly payroll, so inflating payroll inflated the loan.

From roughly June 2021 through August 2022, Rosenstein allegedly submitted forgiveness applications with the same fabricated payroll documents, plus representations that he'd spent the funds on payroll and other qualified expenses. The indictment alleges he had actually used portions of the proceeds to buy new properties.

The rent roll piece

This is the larger half, and it runs well past the pandemic.

Rosenstein allegedly controlled a group of Arizona entities, 4098 E. 29th Street LLC, 4141 E. 29th Street LLC, 314 E. Benson LLC, and 1025 E. Benson LLC, with a company called Helpful Housing as principal member of each. He is listed as CEO of Helpful Housing.

Between September 2021 and June 2023, those entities obtained five "cash back" refinance loans on four Tucson properties, totaling roughly $35.2 million and producing about $11.0 million in cash to Rosenstein after the prior mortgages were paid off. The lenders were Pacific Premier Bank (now Columbia Bank), M&T Realty Capital Corporation, and ReadyCap Commercial LLC.

Every one of those loans, per the indictment, was supported by rent rolls representing 100% occupancy. The actual occupancy rates alleged range from 56% to 80%.

Two other categories of alleged falsification ran alongside the rent rolls. Co-conspirator B allegedly created phony capital expenditure lists for each loan application, for example, listing $2 million in capital expenses on the 1025 E. Benson property when the real figure was around $200,000, and $1.05 million on 314 E. Benson against roughly $250,000 actual.

And the alleged conduct continued after closing. Count 3 covers a period running from September 2021 through December 2025. The indictment alleges co-conspirators told bank inspectors post-issuance that occupancy was near 100% when it was significantly lower. On the 1025 E. Benson Highway property, condemned by the City in September 2023, after which it had no tenants at all, Co-conspirator B allegedly "staged" the property with fake tenants during lender inspections conducted on behalf of KeyBank on January 29, 2024 and December 30, 2025.

A conviction for conspiracy to commit bank fraud carries up to 30 years and a $1 million fine. The § 371 count carries up to five years and $250,000.

The FBI Phoenix Division's Tucson office, IRS-Criminal Investigation, and the Federal Housing Finance Agency Office of Inspector General conducted the investigation. Assistant U.S. Attorneys Jonathan B. Granoff and David P. Petermann are prosecuting. The case number is 4:26-cr-04213-RM-EJM.

Why these PPP prosecutions keep coming

No one should be surprised at this point. There is a structural reason the filings continue.

In August 2022, Congress extended the statute of limitations for PPP and COVID-19 EIDL borrower fraud from five years to ten, through the PPP and Bank Fraud Enforcement Harmonization Act and the companion EIDL bill. Both passed with bipartisan support. The ten-year clock applies whether the loan came from a bank or a fintech, which closed a gap that had given fintech-originated loans a shorter window.

That means charges tied to 2020 and 2021 loans can be brought into the early 2030s. And because a forgiveness application is its own act, the clock on a given borrower can run from the last false submission rather than the original loan.

Both cases also carry DOJ's current framing. The Department announced the creation of a National Fraud Enforcement Division on April 7, 2026, which it describes as focused on prosecuting those who fraudulently obtain taxpayer funds.

The Rosenstein indictment is the more instructive document for anyone in commercial finance, and not because of the PPP counts. The alleged pattern there is document fabrication applied first to a federal relief program and then, on a much larger scale, to conventional commercial mortgage lending, same playbook, different collateral. The rent roll, the capital expenditure schedule, and the post-closing inspection are all points where a lender relies on borrower-supplied paper. All three are alleged to have been falsified, the last one reportedly as recently as December 2025.

We'll keep reporting these as they come. Anyone who took advantage of a program built for businesses that were actually struggling ought to be named.