Hopkinton couple faces federal charges for using their Framingham roofing company to defraud workers’ comp insurers of $627K and the SBA on a $2 million COVID-19 relief loan
A federal grand jury has indicted a Hopkinton couple, Ronaldo Solano, 51, and Adriana Solano, 40, charging them with defrauding their workers’ compensation insurance carriers, the Small Business Administration (SBA), and their mortgage lender. The Solanos operate a roofing and construction company based in Framingham under the names H&R Roofing & Construction Inc. and H&R Roofing & Siding Corp.
According to the indictment, the couple’s alleged fraudulent activities occurred between 2012 and 2022. The indictment accuses the Solanos of avoiding more than $627,000 in workers’ compensation insurance premiums by underreporting their payroll and paying employees through a shell company. Additionally, they allegedly obtained $2 million in pandemic relief funds through the SBA’s Economic Injury Disaster Loan (EIDL) Program and fraudulently used over $825,000 of these funds as a down payment on a home in Hopkinton without disclosing the source of the funds to their mortgage lender.
Workers’ Compensation Insurance Fraud Scheme
Underreporting payroll to insurance carriers
According to the indictment, from 2012 to 2020, Ronaldo and Adriana Solano engaged in a scheme to defraud their workers’ compensation insurance carriers, only identified in the indictment as “Insurance Company 1” and “Insurance Company 2,” by underreporting the payroll of their companies, H&R Roofing & Construction Inc. and H&R Roofing & Siding Corp. The Solanos allegedly falsely reported to the insurance companies at times that they had no employees or contract labor or that their employees only performed clerical or sales work when, in fact, they had employees engaged in roofing work. By underreporting their payroll, the Solanos could avoid paying the full workers’ compensation insurance premiums owed to the insurance companies.
Using a shell company to pay employees and evade premiums
In addition to underreporting their payroll, the Solanos allegedly used a shell company to pay their employees. By paying employees through a separate entity, the Solanos further insulated themselves from disclosing the true size of their workforce and the nature of their employees’ work from their workers’ compensation insurance carriers.
Total amount of premiums evaded: approximately $627,000
The indictment alleges that through their scheme of underreporting payroll and paying employees through a shell company, Ronaldo and Adriana Solano avoided paying approximately $627,000 in workers’ compensation insurance premiums between 2012 and 2020. This sum represents the difference between the premiums the Solanos paid and the premiums they would have owed had they accurately reported their payroll and the nature of their employees’ work to their insurance carriers.
Economic Injury Disaster Loan (EIDL) Fraud Scheme
A $2 million SBA loan for their roofing business
According to the indictment, in September 2021, Ronaldo Solano submitted an application to the Small Business Administration (SBA) for an Economic Injury Disaster Loan (EIDL) on behalf of H&R Roofing & Siding Corp. Until 2022, the EIDL program provided financial assistance to eligible small businesses experiencing substantial financial disruption due to the COVID-19 pandemic. In the application, Solano requested $2 million in relief funds for working capital and other eligible business expenses. Both Ronaldo and Adriana Solano allegedly made multiple calls to the SBA to inquire about the status of their EIDL application.
Transferring $1 million of EIDL funds to a personal account
In February 2022, the SBA wired $1,999,900 in EIDL funds to H&R Roofing & Siding Corp.’s business account. The indictment alleges that Ronaldo and Adriana Solano opened a new business account for H&R Roofing & Siding the following day and transferred $2 million from the original business account to the new one. Subsequently, the Solanos transferred $1 million from the new business account to their personal bank account, which had a balance of only $7,040.91 before the transfer.
Using over $825,000 of EIDL funds for a down payment on a Hopkinton home
After transferring the EIDL funds to their account, Ronaldo and Adriana Solano allegedly used more than $825,000 as a down payment to purchase a home in Hopkinton, Massachusetts, for $1.7 million. The indictment states that on April 5, 2022, the Solanos wired $879,764.43 from their account to an IOLTA account controlled by the closing attorney for the purchase of the Hopkinton property.
Mortgage Fraud
Borrowing $770,500 from a mortgage lender for the Hopkinton home purchase
In addition to using $825,000 of the EIDL funds for the down payment on the Hopkinton home, Ronaldo and Adriana Solano borrowed $770,500 from a mortgage lender, Guaranteed Rate, Inc., to finance the remainder of the purchase price. The indictment alleges that on April 6, 2022, Ronaldo and Adriana Solano electronically signed Uniform Residential Loan Applications (URLAs) to obtain the Guaranteed Rate, Inc. mortgage loan.
Failing to disclose the use of EIDL funds for the down payment to the lender
According to the indictment, in their respective URLAs, Ronaldo and Adriana Solano responded “NO” to the question, “Are you borrowing any money for this real estate transaction (e.g., money for your closing costs or down payment) or obtaining any money from another party, such as the seller or realtor, that you have not disclosed on this loan application?” The Solanos allegedly failed to disclose to Guaranteed Rate, Inc. that they were using funds from the EIDL to pay for the down payment on the Hopkinton home. The indictment further states that Guaranteed Rate, Inc. issued the $770,500 mortgage loan to the Solanos based on their materially false and fraudulent statements in the URLAs.
Charges in the indictment and the potential penalties
Conspiracy to commit mail and wire fraud
Ronaldo and Adriana Solano have been charged with one count each of conspiracy to commit mail and wire fraud in connection with their alleged workers’ compensation insurance fraud scheme. This charge carries a potential sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
Conspiracy to commit wire and bank fraud
The Solanos also each face one count of conspiracy to commit wire and bank fraud related to the alleged EIDL scheme and mortgage fraud. This charge carries a potential sentence of up to 30 years in prison, five years of supervised release, and a fine of $1 million or twice the gross gain or loss, whichever is greater.
Mail fraud and wire fraud charges for Ronaldo Solano
In addition to the conspiracy charges, Ronaldo Solano has been charged individually with mail fraud and one wire fraud. Each charge carries a potential sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
Potential sentences for each charge are subject to federal sentence guidelines
While the federal statutes creating the crimes alleged in the indictment state the maximum allowable sentences for each charge, a federal district court judge will decide the sentences imposed, consistent with the federal sentencing guidelines, if the Solanos are convicted or plead guilty.
Passport Surrender and Notice to the Brazilian Consulate
Solanos required to surrender passports
As part of their conditions of release on personal recognizance, Ronaldo and Adriana Solano had their travel restricted to Massachusetts and were ordered to surrender their passports to the United States Probation and Pretrial Services. This standard measure ensures that defendants do not flee the country while awaiting trial or other court proceedings related to the charges against them. However, as Adriana Solano is a dual national of the United States and Brazil, additional steps were required to ensure compliance with the Court’s travel restriction.
Notice to the Brazilian Consulate in Boston
On March 13, 2024, the United States District Court for the District of Massachusetts ordered Adriana Solano’s counsel to inform the Brazilian Consulate in Boston of the pending charges against her and the Court’s order prohibiting her from applying for or obtaining travel documents while the case is pending or until further order of the Court. On March 14, 2024, Ms. Solano’s counsel filed a Notice of Compliance with the Court, confirming that he had notified the Brazilian Consulate as required by the Court’s order.
The Prosecution team
Acting United States Attorney Joshua S. Levy; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Christopher Algieri, Special Agent in Charge of the Northeast Field Office of the U.S. Department of Veterans Affairs Office of Inspector General; and Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office made the announcement of the arrest and arraignment of the Solanos. According to the announcement, valuable assistance was provided by the Insurance Fraud Bureau of Massachusetts. Assistant U.S. Attorney Kristen A. Kearney of the Securities, Financial & Cyber Fraud Unit is prosecuting the case.
Hotline for reporting COVID-19 benefit program frauds
The prosecution team’s announcement emphasized that anyone with information about allegations of fraud or attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The Disaster Fraud website allows you to submit complaints of fraud, waste, abuse, or mismanagement related to any man-made or natural disaster but also handles tips relating to criminal activity involving the coronavirus (COVID-19) benefit programs for individuals and businesses.
