A 58-year-old Huntington Beach man accused of orchestrating nearly $38 million in fraud is being held without release ahead of trial in Tucson, after a federal grand jury indictment accused him of combining a Paycheck Protection Program scam with a much larger commercial loan scheme built on falsified rental records. Rodney Rosenstein and unnamed co-conspirators allegedly obtained approximately $2.9 million through 15 fraudulent PPP loans, according to federal prosecutors, but that figure turns out to be only a fraction of what investigators say he is accused of taking.
According to the U.S. Attorney’s Office for the District of Arizona, the indictment alleges Rosenstein and his co-conspirators fraudulently obtained an additional $35 million through a separate commercial loan fraud scheme that relied on falsified “rent roll” documents — records lenders use to verify a property’s occupancy and rental income before issuing a loan. Combined with the PPP allegations, prosecutors say the total fraud proceeds top $37.9 million. The case was first flagged in a news alert from FBI Phoenix, which announced the indictment and detention on social media.
How the Alleged Scheme Worked
Federal prosecutors allege the $2.9 million PPP scheme relied on fake W-2 forms and falsified employment tax documents to secure the 15 separate loans. After the loans were disbursed, the indictment alleges Rosenstein and his associates submitted fraudulent payroll documentation and false statements in order to have the loans fully forgiven — a process the Paycheck Protection Program allowed when borrowers could show funds went toward eligible payroll and operational costs.
The Paycheck Protection Program itself was created under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, passed at the start of the pandemic. The much larger $35 million allegation centers on falsified rent rolls, a tactic commercial loan fraud schemes frequently use to trick lenders into issuing inflated mortgages based on exaggerated occupancy and rental income figures.
Detained Pending Trial in Arizona
Rosenstein was ordered detained pending trial by U.S. Magistrate Judge Eric J. Markovich on August 31, sitting in Tucson, court records show. The case is being prosecuted under docket number 26-CR-04213-TUC-RM in the District of Arizona, even though Rosenstein lives in Huntington Beach, California. Federal prosecutors handle complex multi-state financial fraud cases like this one in whichever district co-conspirators operated or where affected lenders processed the loan transactions, and the U.S. Attorney’s Office notes that federal court proceedings in this matter are centered in Arizona…