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Lehi man pleads guilty to fraud, conspiracy charges that originated in Utah, New Jersey

The Clarkson S. Fisher Building and U.S. Courthouse in Trenton, New Jersey. A Lehi man pleaded guilty Monday to charges in two separate cases in connection with a PPP fraud scheme in Utah and a credit card fraud scheme in New Jersey.

The Clarkson S. Fisher Building and U.S. Courthouse in Trenton, New Jersey. A Lehi man pleaded guilty Monday to charges in two separate cases in connection with a PPP fraud scheme in Utah and a credit card fraud scheme in New Jersey. (Google Maps)



Estimated read time: 4-5 minutes

SALT LAKE CITY — A Utah man facing numerous felonies connected to white collar crimes has pleaded guilty to charges in two separate fraud cases, one originating in Utah and the other in New Jersey.

Timothy Gibson, of Lehi, pleaded guilty Monday to bank fraud and two counts of making false statements to banks. The hearing took place in federal court in Trenton, New Jersey.

In Utah, Gibson was initially charged in April with submitting false applications in order to get a Paycheck Protection Program loan. The PPP program was a part of the CARES Act, which was signed into law in 2020 that offered money to individuals and businesses financially damaged due the COVID-19 pandemic.

Gibson and others — not named in the indictment — submitted a PPP loan application online to Mountain America Credit Union on behalf of a business called 17 Paths LLC. The application contained false information about the business, saying that company had seven employees, when it only had one, according to the plea agreement filed in Gibson's Utah case. The application also said the average monthly payroll was $56,000, when prosecutors say it was actually around $5,000.

PPP loan records published by ProPublica show that an Eagle Mountain-based business named 17 Paths LLC received $11,949 from Mountain America Credit Union, though, Utah business entity records do not list Gibson as the company's registered agent.

Gibson was also charged with making additional false statements on loan applications for two separate Utah businesses — Creative Investment Group LLC and Polaris Development Group LLC. For Creative Investment's loan application, prosecutors said the document claimed the business had eight employees when it only had one, and the application said the business had $66,000 in average monthly payroll expenses when it actually had none. For Polaris Development's application, the document said it had 10 employees when it only had one, and an average monthly payroll of $83,000 when it actually had none. The plea agreement acknowledges that both applications contained false information.

The plea agreement also says that Gibson "advised approximately 25 clients that they could apply for (PPP) loans using false and fraudulent information." Initial charging documents said that Gibson told clients they could use PPP loan money to "grow their business."

Gibson was charged with those crimes in Utah last month, but court records indicate he was already facing charges in New Jersey. Because of this, Gibson's Utah charges was able to be transferred to New Jersey, where both cases were prosecuted.

Federal court records indicate that Gibson was indicted by a New Jersey grand jury in May 2020 with conspiracy to commit wire fraud. He also pleaded guilty to the conspiracy charge during this court hearing on Monday. Gibson's 2020 case stems from a scheme that involved fraudulently obtaining airline miles and selling the miles for cash, according to charging documents in New Jersey's federal court.

Gibson and another man, Aharon Lev, would open small-business accounts through a credit card company using the names of phony businesses, according to charging documents in the New Jersey case. Lev would recruit individuals to give him their personal information, like their Social Security numbers, in order to open the small-business accounts with the credit card company, according to a news release from the U.S. Attorney's Office in New Jersey.

Lev allegedly would use those accounts to make purchases and generate rewards points, and would then exchange the points for airline miles. When the miles were issued, Lev would cancel the purchases and sell the miles for cash to Gibson, who would resell the points to third parties, charging documents say. The two would then close the fraudulent accounts before they would accrue annual fees or other expenses.

The scheme, which took place between January 2014 and May 2016, caused the credit card company to pay roughly $8.2 million to airlines for accepting the rewards points in exchange for miles, according to charging documents. Lev allegedly opened over 7,000 fraudulent accounts to facilitate the scheme. As of Friday, Lev's case, which includes charges of aggravated identity theft and wire fraud, was still pending.

The plea agreement in Gibson's Utah case says that he will likely receive a stipulated sentence of two years in prison. However, the judge is not mandated to accept the plea deal, and either the prosecution or the defense would be able to withdraw from the agreement if the judge does not accept it. Each of the three charges carry maximum terms of 30 years in prison and a maximum fine of $1 million.

In the New Jersey case, Gibson faces a maximum sentence of up to 20 years in prison. The New Jersey plea document says Gibson will agree to pay at least $117,068 in restitution.

Gibson's next court appearance will be for his sentencing, which is scheduled to take place on Sept. 22 in the Trenton, New Jersey court.

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Jacob Scholl joined KSL.com as a reporter in 2021. He covers northern Utah communities, federal courts and technology.

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