Category: USDJ National Center for Disaster Fraud

Source: United States Department of Justice (National Center for Disaster Fraud)

Jacksonville, Florida – United States Attorney Roger B. Handberg announces the return of a superseding indictment charging Jared Dean Eakes (33, Jacksonville) with five counts of wire fraud and three counts of bank fraud. If convicted, Eakes faces a maximum penalty of 20 years in federal prison for each wire fraud count and up to 30 years’ imprisonment for each bank fraud count. The indictment also notifies Eakes that the United States is seeking orders of forfeiture in the total amount of $7,489,732.20, the proceeds of the charged criminal conduct.

According to the superseding indictment, Eakes portrayed himself as a legitimate advisor and contacted investment advisors who were looking to sell their advisory businesses. After negotiating to take over management of the advisors’ client assets, between approximately January 2019 and February 2020, Eakes converted approximately $2,737,462 of victim investor funds to his own benefit by withdrawing the funds in cash, using investor funds to pay personal expenses, transferring investor funds to a Las Vegas-based casino company, and by engaging in unauthorized options trading in a personal brokerage account. 

Also, according to the superseding indictment, between March 2020 and November 2021, Eakes fraudulently secured approximately $4,752,270 in emergency funds through four Paycheck Protection Program (“PPP)” loans. 

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a federal law enacted March 2020.  It was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $349 billion in potentially forgivable loans to small businesses for job retention and certain other expenses through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allowed qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses were required to use PPP loan proceeds for payroll costs, interest on mortgages, rent, and utilities.  The PPP allowed the interest and principal to be forgiven if the business spent the proceeds on these expenses within a set time-period and used at least a certain percentage of the loan towards qualifying business expenses.

According to the superseding indictment, Eakes caused the submission of four PPP loan applications—including applications for two of the entities involved in the scheme to defraud investors—which contained false and fraudulent supporting documentation and statements regarding the entities’ employees and payroll. Once he obtained the emergency loans, Eakes did not use the funds for qualifying expenses. Instead, he used the funds to engage in options trading or withdrew them in cash.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.          

This case was investigated by the Federal Bureau of Investigation and the Federal Housing Finance Agency – Office of Inspector General.  It will be prosecuted by Assistant United States Attorneys David B. Mesrobian and Aakash Singh.

Source: United States Department of Justice (National Center for Disaster Fraud)

ST. LOUIS – U.S. District Judge Stephen R. Clark on Tuesday sentenced a St. Louis County, Missouri woman to five years of probation and 18 months of house arrest and ordered her to repay $131,155 for helping her son fake a mental disability for more than 13 years as well as defrauding the Social Security Administration to obtain benefits for herself.

Zella Rives, 57, of Edmundson, bolstered her son’s false claims of disability from 2010 to 2013 by concealing his lies and acting as representative payee for him. Zella Rives fraudulently confirmed Gino Rives’ eligibility in 2019, concealing his ownership of multiple houses and vehicles, his ability to earn income and his relationship with his girlfriend, her plea agreement says. 

Zella Rives pleaded guilty in February to five counts of theft of government funds and one count of making a false statement. 

“Zella Rives held a position of trust for 13 years as a representative payee, which she misused in fraudulently obtaining Supplemental Security Income benefits for her son. She concealed that he was not disabled, and falsely reported about his employment and resources so his benefits would continue,” said Elena Torres Burfield, Special Agent in Charge, Social Security Administration Office of the Inspector General, Midwestern Cooperative Disability Investigations Division. “This sentence demonstrates that her criminal actions are punishable under the law and my office will continue to protect SSA’s disability programs for those who are truly eligible to receive them. I thank the U.S. Secret Service for their work in this investigation and the U.S. Attorney’s Office for prosecuting this case.”

In June, Judge Clark sentenced Gino Rives, 36, of Edmundson, to 87 months in prison for the disability fraud case and a separate case involving his financial exploitation of two elderly women. Gino Rives obtained four vehicles and checks totaling more than $855,000 from one woman and used her debit card for personal purchases for himself and his family. He executed a quit claim deed and transferred a house belonging to the other victim into his name before.

The Social Security Administration Office of Inspector General and the U.S. Secret Service investigated the case. Assistant U.S. Attorney Tracy Berry prosecuted the case.

Source: United States Department of Justice (National Center for Disaster Fraud)

Baltimore, Maryland – On July 18, 2024, U.S. District Judge Brendan A. Hurson sentenced Stephawn Watson, also known as “O Dawg,” age 28, of Capitol Heights, Maryland to 53 months in federal prison, followed by three years of supervised release, for charges related to a Maryland and California unemployment insurance (UI) fraud scheme totaling more than $1.5 million, as well as Illegal Possession of a Firearm.  Judge Hurson also ordered Wason to forfeit over $90,000 and to pay restitution of $2,094,319.

The sentence was announced by Erek L. Barron, U.S. Attorney for the District of Maryland; Acting Postal Inspector in Charge Ajay Lall of the U.S. Postal Inspection Service – Washington Division; Special Agent in Charge Michael McCarthy of Homeland Security Investigations (HSI) Baltimore; and Special Agent in Charge Troy W. Springer of the National Capital Region, U.S. Department of Labor’s Office of Inspector General (“DOL-OIG”); Chief Amal E. Awad of the Anne Arundel County Police Department, Colonel Roland L. Butler, Jr., Superintendent of the Maryland State Police (MSP); Chief Charles H. Hinnant of the Cumberland Police Department, and Special Agent in Charge Toni M. Crosby of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Baltimore Field Division.

Financial assistance offered through the CARES Act included expanded eligibility for Unemployment Insurance (“UI”) benefits and increased UI benefits through the Pandemic Unemployment Assistance Program (“PUA”), Federal Pandemic Unemployment Compensation (“FPUC”), and the Lost Wages Assistance Program (“LWAP”).

According to his plea agreement, from March 2020 to October 2021, Watson and his co-conspirators impersonated victims to submit fraudulent claims for pandemic-related UI benefits in Maryland and in California.  As part of the scheme, Watson and his co-conspirators obtained the birthdates, social security numbers, and other personal identifying information (“PII”) of numerous victims which they used to prepare and submit fraudulent applications for UI benefits.  The applications contained false information, including the victims’ contact information, states of residence, and availability for work.  These fraudulent applications caused financial institutions to load UI benefits onto debit cards and mail the cars to physical addresses provided and monitored by co-conspirators.  Once Watson and his co-conspirators received fraudulently obtained benefits on the debit cards, they used them for cash withdrawals and other transactions for their own benefits. 

A search of Watson’s residence in February, 2021, recovered 11 UI debit cards in the names of 9 victims as well as a fraudulent account created in Watson’s name.  The investigation also revealed numerous text messages between Watson and his co-conspirators exchanging PII of victims and discussing the execution of the UI fraud scheme.  In all, Watson and his co-conspirators submitted more than 200 fraudulent UI claims using the names and PII of victims, resulting in more than $1.6 million in losses.

Watson was also sentenced for his Illegal Possession of a Firearm based on his arrest in January 2022 by the Cumberland Police Department.  At the time of his arrest, Watson was wanted for three different warrants in three different jurisdictions for firearms related offenses.  The firearm was later determined to be stolen.

The District of Maryland Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.  The CARES Act was designed to provide emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic.  The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors.  The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.

For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.  Anyone with information about allegations of 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.

U.S. Attorney Barron commended the USPIS, HSI, DOL-OIG, the Anne Arundel County Police Department, MSP, the Cumberland Police Department, and the ATF for their work in the investigation.  Mr. Barron thanked Assistant U.S. Attorney Colleen Elizabeth McGuinn who prosecuted the federal case.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.

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Source: United States Department of Justice (National Center for Disaster Fraud)

Tampa, FL – United States Attorney Roger B. Handberg announces the arrest of Rosson Hamilton (40, Brandon) on an indictment charging him with two counts of wire fraud. If convicted, Hamilton faces up to 20 years in federal prison on each count.                                                                                                                                  

According to court records, between February 2021 and January 2022, Hamilton devised a scheme to defraud the Small Business Administration by submitting a false and fraudulent Paycheck Protection Program (PPP) loan application. PPP loans were one of the sources of economic relief provided for by the Coronavirus Aid, Relief and Economic Security (CARES) Act. Hamilton made false representations in his PPP application to secure the loan. The loan proceeds were later electronically transferred into his bank account.                                                         

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.               

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General, the Federal Bureau of Investigation, and the U.S. Small Business Administration – Office of Inspector General. It is being prosecuted by Special Assistant United States Attorney Chris Poor.

Source: United States Department of Justice (National Center for Disaster Fraud)

Tampa, FL – United States Attorney Roger B. Handberg announces the arrest of David Antonetti (28, Riverview) on an indictment charging him with two counts of wire fraud. If convicted, Antonetti faces up to 20 years in federal prison on each count.                                                                                                                                  

According to court records, between March 2021 and October 2021, Antonetti devised a scheme to defraud the Small Business Administration by submitting two false and fraudulent Paycheck Protection Program (PPP) loan applications. PPP loans were one of the sources of economic relief provided for by the Coronavirus Aid, Relief and Economic Security (CARES) Act. Antonetti made false representations in both of his PPP applications to secure the loans. The loan proceeds were later electronically transferred into his bank account.                                 

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.                                                                                                       

In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.                      

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General, the Federal Bureau of Investigation, and the U.S. Small Business Administration – Office of Inspector General. It is being prosecuted by Special Assistant United States Attorney Chris Poor.

Source: United States Department of Justice (National Center for Disaster Fraud)

MIAMI – Malaina Chapman, 37, of Hialeah, Fla. has been charged with conspiracy to commit wire fraud, wire fraud and bank fraud.  She had her initial appearance in Miami federal court today.

According to allegations in the criminal complaint, Chapman was employed as a Disaster Relief Specialist with the Small Business Administration (SBA) from Sept. 28, 2020, through her resignation on March 18, 2021. While employed by the SBA, Chapman became involved in multiple schemes to defraud the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, as well as to defraud local credit unions and local and state programs designed to assist those affected by the Covid-19 pandemic pay their rent. 

“Disaster relief was intended for people in need, namely functioning businesses, corporate forms, and sole proprietorships facing uphill prospects during the pandemic, not for those who sought to pad their pockets and defraud the government by making up entities or overstating their payroll and revenues to qualify for the relief,” stated U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “We will continue to hold anyone accountable who exploits and defrauds financial institutions and the government’s pandemic response to enrich themselves at the expense of struggling businesses, employees, and local tenants. While the COVID-19 relief programs have ended, our commitment to identifying and prosecuting those who defrauded them has not.”

“Today’s charges highlight our unwavering commitment to protecting the integrity of SBA programs,” said SBA OIG’s Eastern Region Special Agent in Charge Amaleka McCall-Braithwaite. “Exploiting relief efforts for personal gain undermines public trust and deprives legitimate businesses of essential assistance. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to ensuring that those who engage in fraudulent schemes are held accountable to the fullest extent of the law.”

On Feb. 10, 2021, Chapman, while employed by the SBA, submitted, via interstate wire communication, a loan application in the name of Upscale Credit Lounge to Lender 3.  In support of her application, Chapman submitted a purported tax year 2020 Schedule C form that reported gross revenues of $103,674 and a tentative profit of $81,860. Lender 3 relied upon the representations in Chapman’s application and on Feb. 11, 2021, approved a loan in the amount of $17,052.50.  Further investigation revealed that the Schedule C, attached to Chapman’s application was false and fraudulent. 

On Feb. 19, 2021, Chapman, again while still employed by the SBA, submitted, via interstate wire communication, a PPP loan application with Lender 3 on behalf of DA TRAP. In her application, Chapman claimed that she had four employees and an average monthly payroll of $14,191. In support of her application, Chapman submitted four IRS Employers Quarterly Tax Return forms (Form 941), which purportedly documented the wages paid by DA TRAP. Lender 3 relied upon the representations in the application and on Feb. 26, 2021, approved a loan in the amount of $35,477.50. Further investigation revealed that the multiple IRS Forms 941 attached to Chapman’s application were false and fraudulent.

Chapman also conspired with others to submit false and fraudulent PPP loan applications on their behalf. Six defendants were charged in Case No. 24-CR-20079 and in that case defendant Raisha Kelly was the alleged ringleader of the conspiracy and prepared and caused the preparation of numerous false and fraudulent loan applications to be submitted to SBA-approved PPP lenders.  Chapman aided and abetted this conspiracy by creating false and fraudulent IRS documents and sending them to Kelly, who in turn used them to submit false and fraudulent applications for PPP loans.

In addition to defrauding the PPP program, Chapman is also charged with taking advantage of the State of Florida and the City of Miami’s Covid-19 Emergency Rental Assistance Programs. Specifically, on Oct. 13, 2021, Chapman began the process of applying for benefits under the State of Florida’s Emergency Rental Assistance program. Chapman was purportedly a tenant at a residence in Miami. Chapman submitted required information and documents through an online portal set up to distribute benefits under the program. On Jan. 20, 2022, Chapman submitted a written document titled “3-day notice to pay rent or quit.” These documents were dated Dec. 7, 2021, and purportedly signed by Individual 2, the defendant’s mother. Individual 2 died on May 25, 2020. The State of Florida accepted the representations in Chapman’s application and approved payments totaling $15,000. These payments were made into bank accounts controlled by Chapman. 

U.S. Attorney Markenzy Lapointe for the Southern District of Florida; Special Agent in Charge Jonathan Ulrich, U.S. Postal Service Office of Inspector General (USPS OIG); Special Agent in Charge Amaleka McCall-Brathwaite, U.S. Small Business Administration Office of Inspector General (SBA OIG), Investigations Division’s Eastern Region; and Special Agent in Charge Mathew Broadhurst of the U.S. Department of Labor Office of Inspector General (DOL-OIG), Southeast Region, made the announcement.

USPS OIG, SBA OIG and DOL-OIG handled the investigation. This case is being prosecuted by Assistant U.S. Attorney Daniel Bernstein.

The charges contained in the criminal complaint are merely accusations and all defendants are presumed innocent unless and until proven guilty in a court of law.   

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

On September 15, 2022, the Attorney General selected the Southern District of Florida’s U.S. Attorney’s Office to head one of three national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud.  The Strike Force combines law enforcement and prosecutorial resources and focuses on large-scale, multistate pandemic relief fraud perpetrated by criminal organizations and transnational actors, as well as those who committed multiple instances of pandemic relief fraud. The Strike Force uses prosecutor-led and data analyst-driven teams to identify and bring to justice those who stole pandemic relief funds. Additional information regarding the Strike Force may be found at https://www.justice.gov/opa/pr/justice-department-announces-covid-19-fraud-strike-force-teams.

Anyone with information about allegations of 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.   

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 24-mj-03358.

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Source: United States Department of Justice (National Center for Disaster Fraud)

PEORIA, Ill. – A Morton, Illinois, man, Aaron J. Rossi, 41, was sentenced on July 2, 2024, to five years in prison and ordered to pay more than $3 million in restitution and fines for his scheme to defraud his former employer and filing of false income taxes.

A federal grand jury returned an indictment in March 2022, charging Rossi with three counts of filing false tax returns. A superseding indictment adding six counts of mail fraud for a fraud committed against his former employer, was returned in July 2022. Rossi entered into a plea agreement in February 2024, in which he pleaded guilty to one count of filing a false tax return and one count of mail fraud. The remaining seven counts were dismissed.

At the sentencing hearing before Chief U.S. District Judge Sara Darrow, the government presented evidence that Rossi had engaged in a practice of lying and deceiving others for his own benefit from the outset of his former employment at Central Illinois Orthopedic Surgery (“CIOS”) through the entirety of the court proceedings on these charges. The government demonstrated how Rossi had spent years lying to his employer while stealing money and then, simultaneously, providing false information on his tax returns. Rossi admitted that he had taken funds from CIOS without its knowledge or permission and had purchased personal items and services with the funds. Among other expenditures, he used the funds to purchase a home theater system, lease a luxury vehicle, and rent a private jet for his bachelor party. Further, the government demonstrated that Rossi’s scheme included falsely representing himself to others, including patients, as a doctor even though he was not a licensed physician and not authorized to practice medicine. He also wrote 29 counterfeit prescriptions, one of which was falsely written in the name of a third party who, as a result, was denied entry into a cancer trial.

In imposing sentence, Judge Darrow noted that Rossi’s theft served no purpose other than his own greed and desire. She stated that he was already legally receiving a handsome salary from his former employer but stole from them to further his lifestyle. She explained that he did not use the money for necessities, or even things that were “nice to have” but rather for items that were luxuries. She further discussed Rossi’s betrayal of his former employer and his theft from innocent people who had done nothing wrong at all but instead trusted Rossi, befriended him, and offered to mentor him. Judge Darrow described that betrayal and Rossi’s squandering of opportunity and his talents as a shame.

Judge Darrow ultimately found that the Federal Sentencing Guidelines did not fully capture the scope of Rossi’s fraud. As a result, she sentenced him to 60 months in the Bureau of Prisons, to be followed by a two-year term of supervised release; imposed a fine of $1,000,000, and ordered him to pay full restitution in an amount of more than $2.2 million dollars to his former employer as well as taxes to the Internal Revenue Service and the State of Illinois’ Department of Revenue.

Rossi was originally released on bond following indictment, but his bond was revoked, and he was placed in the custody of the U.S. Marshals Service in September 2023 after multiple bond violations. He had remained in custody pending sentencing.

Rossi faced statutory penalties of up to 20 years’ imprisonment and up to a three-year term of supervised release for the mail fraud, and up to 3 years’ imprisonment and up to a one-year term of supervised release for the false tax return count. Each of the counts also carried a potential fine.

“This sentence highlights the tireless effort and commitment of the investigative agencies and prosecutors who seek justice against those who commit this type of fraud.” said U.S. Attorney Gregory K. Harris. “Crimes such as these continue to cost employers and taxpayers billions of dollars each year. My office will maintain its fight to protect the citizens in Central Illinois from this fraudulent conduct.”

“The sentencing of Aaron Rossi sends a clear message that the U.S. Postal Inspection Service will aggressively investigate and bring to justice those who use the U.S. Mail to line their pockets. We are dedicated to defending the nation’s mail system from criminal activity and preserving the integrity of the U.S. Mail.  We value our law enforcement partners and their support of our mission,” said Ruth Mendonça, Inspector in Charge of the Chicago Division of the U.S. Postal Inspection Service, which includes Peoria, Illinois.

“This sentencing sends a clear message that deceit, and theft—especially in times of crisis—will not go unpunished,” said Ramsey E. Covington, Acting Special Agent in Charge, IRS Criminal Investigation, Chicago Field Office. “Aaron Rossi shamelessly stole from his employer, the State of Illinois, and the American public for his own personal gain during a time when many people were struggling. IRS Criminal Investigation and our law enforcement partners remain steadfast in our commitment to holding individuals like Rossi accountable while ensuring that justice is served.”

The case investigation was conducted by the United States Postal Inspection Service, and the Internal Revenue Service. The Federal Bureau of Investigation, Springfield Field Office also provided assistance. Assistant U.S. Attorneys Douglas F. McMeyer and Tanner K. Jacobs represented the government in the prosecution.

Source: United States Department of Justice (National Center for Disaster Fraud)

            WASHINGTON – Zhong Jie Chen, 47, formerly of Randolph, Maryland, was sentenced today to 18 months in prison for misappropriating $354,520 of COVID-19 relief funds that he was supposed to use to operate his restaurants during the pandemic. Chen used the funds to engage in day trading. The sentencing was announced by U.S. Attorney Matthew M. Graves and FBI Special Agent in Charge David J. Scott of the Washington Field Office’s Criminal and Cyber Division.

            Chen, who now lives in New Jersey, pleaded guilty in U.S. District Court on February 28, 2024, to wire fraud. In addition to the prison term, the Honorable Christopher R. Cooper ordered Chen to serve three years of supervised release and to pay $369,087 in restitution.

            In court documents, Chen admitted that, while he was a Maryland resident, he was the sole owner of two Shanghai Tokyo Café restaurants, one in the District’s Columbia Heights neighborhood, and the other in College Park, MD. Between May 2020 and July 2021, he applied for Paycheck Protection Program (PPP) and Economic Injury Disaster (EIDL) loans for the two eateries.

            The Paycheck Protection Program was a COVID-19 pandemic relief program administered by the U.S. government’s Small Business Administration (SBA) that provided forgivable loans to small businesses for job retention and certain other expenses. Once the PPP loan applications were approved, businesses received loan proceeds from third-party lenders. In response to the COVID-19 pandemic, the SBA also offered EIDL loans to certain entities, including small business owners. These loans were provided directly from the SBA and were low-interest, fixed-rate, long term loans. Both PPP loans and EIDL loans could only be used for specified purposes.

            Between May 2020 and July 2021, Chen’s two restaurants received PPP and EIDL loans totaling approximately $964,843. On loan applications, Chen acknowledged understanding how the loans could be used and that if he knowingly used funds for unauthorized purposes, he could be held legally liable by the federal government, and potentially charged with fraud.

            Chen admitted that he falsely certified that all loan proceeds would be used for business-related purposes even though he knew and intended that he would misappropriate some loan proceeds to a personal investment account to allow him to engage in day trading. He admitted that he misappropriated $354,520 of loan proceeds and used those funds to engage in day trading through his Robinhood and TD Ameritrade accounts.

            This case was investigated by the FBI Washington Field Office. It is being prosecuted by Assistant U.S. Attorneys Kondi Kleinman and Ryan Sellinger, who were assisted by paralegal specialists Sonalika Chaturvedi and Michon Tart.

24cr0050

Source: United States Department of Justice (National Center for Disaster Fraud)

Vanessa R. Avery, United States Attorney for the District of Connecticut, and Harry T. Chavis, Jr., Special Agent in Charge of IRS Criminal Investigation in New England, announced that BILL G. MAKROS, 57, of Danbury, waived his right to be indicted and pleaded guilty today before U.S. District Judge Vernon D. Oliver in Hartford to tax evasion.

According to court documents and statements made in court, Makros owned and operated a tree service business known as Budget Tree and Stump Removal Service, LLC.  From 2016 through 2020, Makros concealed his income by receiving customer payments in the form of checks made payable to “cash” or to him personally, and by depositing the checks into bank accounts other than his business bank account.  At times, he also cashed check payments and did not deposit the cash into any business or personal accounts.  For the 2016 through 2020 tax years, Makros failed to file his federal individual tax returns, and failed to pay $140,462 in taxes on approximately $517,000 in net profits.

In addition, during the COVID-19 pandemic, Makros applied for pandemic relief loans and, as part of that process, submitted IRS Schedule C forms for his business that purported to be part of his tax returns for 2019 and 2020, even though he had not filed tax returns with the IRS for those years.

Judge Oliver scheduled sentencing for September 27, 2024, at which time Makros faces a maximum term of imprisonment of five years.  Makros is released on a personal recognizance bond pending sentencing.

This investigation is being conducted by the Internal Revenue Service – Criminal Investigation Division.  The case is being prosecuted by Assistant U.S. Attorney Anastasia King.

Source: United States Department of Justice (National Center for Disaster Fraud)

ALEXANDRIA, Va. – A Fredericksburg man pled guilty today to one count of conspiracy to commit wire fraud for his role in defrauding a federal COVID-19 relief program.

According to court documents, in September 2017, Sherman Green Jr., 34, incorporated the business entity Green Information Solutions LLC (“GIS”) and later opened business banking accounts for GIS at Navy Federal Credit Union (NFCU). In May 2020, a co-conspirator told Green about the Paycheck Protection Program (PPP), a COVID-19 relief program intended to provide loans backed by the Small Business Administration to certain businesses, nonprofit organizations, and other entities to help them retain their employees or stay afloat during the pandemic. Green and his co-conspirator prepared and submitted a PPP loan application to Atlantic Union Bank on behalf of GIS with the assistance of a senior bank officer at Atlantic Union Bank.

In the loan application, Green represented that he was the President/CEO of the company, and falsely claimed that GIS employed seven employees with an average monthly payroll of $78,215.41. Based on these false representations, Atlantic Union Bank awarded GIS a first-draw PPP loan in the amount of $195,500, which was deposited into an Atlantic Union Bank account in the name of GIS on May 11, 2020. Green then purchased a series of cashier’s checks drawn on the money from the fraudulently obtained PPP loan and deposited them into GIS’s NFCU business checking account. Although the memo lines on two of the cashier’s checks referred to “payroll” or other business expenses, GIS did not have any employees or any legitimate business expenses. Between May 2020 and March 2021, Green transferred $81,131.60 from GIS’s NFCU business checking account to his personal bank accounts.

In March 2021, Green and his co-conspirator collaborated again to electronically submit a second-draw PPP loan application to Atlantic Union Bank on behalf of GIS. In this application, Green fraudulently claimed that GIS had five employees with an average monthly payroll of approximately $57,486, and had gross receipts of approximately $1,000,500 in 2019 and $700,000 in 2020. Based on these misrepresentations, Atlantic Union Bank awarded GIS a second-draw PPP loan in the amount of $143,715. Green set up payroll and expense accounts for GIS at Atlantic Union Bank and transferred the second-draw funds into them. Green then used those funds for other purposes, such as payment to Ford Motor Credit, and transferred funds into his personal accounts.

To conceal his misuse of the PPP loans, Green set up a Quickbooks account in which transfers falsely appeared as “payroll” in bank statements. From June 15 to July 15 in 2021, Green made seven such transactions knowing they involved criminally derived property and were not being used for payroll.

Green is scheduled to be sentenced on Sept. 3 and faces a maximum penalty of five years in prison. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia; Stephen Ravas, Acting Inspector General for AmeriCorp; David J. Scott, Special Agent in Charge of the FBI Washington Field Office’s Criminal and Cyber Division; John Perez, Special Agent in Charge, Headquarters Operations, Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau; Michael J. Missal, Inspector General, U.S. Department of Veterans Affairs; and Amaleka McCall-Brathwaite, Eastern Region Special Agent in Charge for the Small Business Administration, Office of Inspector General (SBA-OIG), made the announcement after U.S. District Judge Leonie M. Brinkema accepted the plea.

Assistant U.S. Attorneys Katherine E. Rumbaugh and Heidi B. Gesch are prosecuting the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:24-cr-122.