A FORMER analyst at Citadel LLC was ordered to spend more than 4 years in federal prison for scamming US$4.6 million in Covid relief loans for his startup hedge fund, most of which he lost in the market.

Gregory Blotnick, 35, was sentenced on Tuesday (Jun 7) to 51 months behind bars by a federal judge in Newark, New Jersey, and ordered to pay US$4.6 million in restitution. He pleaded guilty in October to submitting 21 fraudulent loan applications to 13 lenders under the Paycheck Protection Program of the March 2020 Covid stimulus bill. 

Blotnick worked as an analyst at Citadel for less than a year and was let go in 2018, according to Zia Ahmed, a spokesman for the firm. He founded Brattle Street Capital LLC in 2019, according to an SEC filing.

Defence lawyer Adam Kaufmann said Blotnick accepted full responsibility for his actions and had taken steps to make things right. “Mr Blotnick will serve his time with dignity and looks forward to becoming a contributing member of society when his sentence is completed,” Kaufmann said. 

Fake payroll

Prosecutors said Blotnick falsified information about Brattle Street in his PPP loan applications, telling one bank the fund employed 45 people with a monthly payroll of more than US$325,000. In reality, according to the government, Brattle Street paid no wages at all in 2019 or 2020.

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Blotnick, a resident of New York and Palm Beach, Florida, sought US$6.8 million in loans and received about US$4.6 million, prosecutors said. He went on to deposit much of the money in brokerage funds and lost more than US$3 million in unsuccessful stock trades.

The federal sentence may not be the only jail time Blotnick gets. According to court records, he also pleaded guilty in October to similar charges brought by the Manhattan district attorney’s office. He faces a possible state court sentencing on Thursday. BLOOMBERG