Auto Executive Charged With Covid-19, Other Fraud Schemes

The owner of GMP Cars in Northern California was charged with fraudulently obtaining at least $8 million through the chain of auto repair centers, a Hilton where he worked as manager, and the federal government’s Covid-19 loan program, federal prosecutors announced Friday.

Geoffrey M. Palermo was charged with wire fraud and making false statements in a loan application in a sealed complaint June 1. He was accused of orchestrating several schemes between 2013 and 2020, including using his company to make false statements that defrauded the U.S. Small Business Administration out of about $1.7 million meant for companies distressed due to the pandemic.

It was “particularly galling” that the alleged scheme involving SBA’s Paycheck Protection Program deprived some employees of their ability to obtain benefits they were entitled to, according to U.S. Attorney David L. Anderson for the Northern District of California.

“PPP funds are intended to protect the many, not to enrich the few,” Anderson said. “The fraud alleged in the indictment reversed Congressional intent by depriving employees and enriching Palermo.”

Prior to his stint at GMP Cars, between 2013 and 2016, Palermo worked at a Hilton in San Francisco where he allegedly embezzled money through kickback schemes. He allegedly received $1.5 million in kickbacks between March 2013 and June 2016.

After leaving Hilton, Palermo allegedly used money from GMP Cars to pay for his lavish lifestyle, including a Ferrari race car and personal travel. This tanked the company’s financial stability, according to the prosecution.

In 2019, before the alleged PPP fraud, Palermo allegedly applied for a $5 million loan for GMP Cars through SBA based on multiple material omissions and false statements. He failed to disclose a number of facts, including that he had overdrawn his business accounts by more than $700,000 in September, according to the criminal allegations.

Palermo is scheduled to make his initial court appearance on June 10.

The case is USA v. Palermo, N.D. Cal., No. 3:20-mj-70681, announced 6/5/20.