Source: US FBI
FAYETTEVILLE – A Florida couple, formerly of Northwest Arkansas were sentenced on August 15, to more than nine (9) years combined in Federal prison. Julia Youngblood age 41, was sentenced to 15 months in federal prison, followed by one year of supervised release, and ordered to pay victim restitution in the amount of $6,131,511.16 on one count of misprision of a felony related to the scheme. Fawaad Welch age 41, was sentenced to 97 months in federal prison, followed by three years of supervised release, and ordered to pay victim restitution in the amount of $6,131,511.16 on one count of wire fraud
The Honorable Judge Timothy L. Brooks presided over the sentencing hearings, which took place in the United States District Court in Fayetteville.
According to court documents and statements made in court, between May of 2020 through October of 2021, Welch, and Youngblood, applied for Pandemic Relief Loan Programs through their Arkansas business, Slipstream Creative, LLC, which was a Northwest Arkansas advertising and marketing company located in Fayetteville, Arkansas.
Throughout the applications, Welch provided the lenders with false statements regarding their assets and liabilities and the intended use of funds received through the SBA7(a), Economic Injury Disaster Loan and Main Street Loan Programs. Welch then arranged for his wife, Youngblood, to sign those applications on behalf of the business. According to the informations filed by the Government, after receiving the loan funds, Welch then diverted large parts of the loan proceeds for the personal benefit of the couple. For example, in the applications submitted for these loans, the couple failed to disclose material information such as tax liabilities and the fact that they were receiving loans from the other loan programs. Also, within months of receiving $1.5 million in “working capital” Economic Injury Disaster Loan funds in October 2021, Welch transferred $1.3 million of that loan to the couple’s personal bank account. The couple then purchased a home in Florida using $445,000 of those Government program loan funds.
In April, Welch and Youngblood waived indictment by a grand jury and pleaded guilty to a criminal information.
According to the plea agreement entered into by Welch, after being asked by Generations Bank officials if Welch and Youngblood take salaries and informed that “the Fed restricts changes to your salaries with the [Main Street Loan Program] and doesn’t allow distributions,” Welch replied, “Yes sir we do at 10k a month, so all is good there. 5k a piece.” After receiving the $3 million in program funds, within a month Welch had transferred $950,000 in Main Street Loan Program funds out of the business and to the couple’s personal accounts.
Preceding the announced prison terms, the Government also forfeited over $1.2 million dollars in recovered loan funds from the couple’s accounts.
U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Federal Bureau of Investigation, the Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau, and the Special Inspector General for Pandemic Relief all investigated the case.
U. S. Attorney David Clay Fowlkes and Assistant U.S. Attorney Ben Wulff prosecuted the case for the United States.
The Fraud Section leads the Criminal Division’s prosecution of fraud schemes that exploit the Paycheck Protection Program (PPP). Since the inception of the CARES Act, the Fraud Section has prosecuted over 150 defendants in more than 95 criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at Justice.gov/OPA/pr/justice-department-takes-action-against-covid-19-fraud.
Related court documents may be found on the Public Access to Electronic Records website at www.pacer.gov.