Man pleads guilty to running COVID-Relief Fraud Scheme | GRANDPA


A Wisconsin man today pleaded guilty to fraudulently receiving over $ 1 million in Paycheck Protection Program (PPP) loans approved by the Small Business Administration (SBA) under Coronavirus Aid, Relief and Economic Security (CARES) Act were guaranteed.

Deputy Assistant Attorney General Nicholas L. McQuaid of the Department of Justice’s Criminal Division; Acting U.S. Attorney Richard G. Frohling of the Eastern District of Wisconsin; Special Representative Sharon Johnson of the Office of the Inspector General of the Small Business Administration (SBA-OIG) Central Region; Special Agent in charge Robert E. Hughes of the FBI Field Office in Milwaukee, Special Agent in Charge John Crawford of Federal Deposit Insurance Corporation OIG (FDIC-OIG), and Special Agent in Charge Tamera D. Cantu of IRS Criminal The Chicago Field Office of Investigation (IRS-CI) known this.

Pewaukee, 46-year-old Thomas Smith pleaded guilty today of bank fraud and is due to be convicted on June 2.

As part of his guilty plea, Smith admitted that he had fraudulently applied for over $ 1.2 million in PPP loans through filings with an insured financial institution on behalf of eight different companies. According to his informed consent, Smith initiated fraudulent loan applications that made numerous false and misleading statements about the respective wages and salaries of the companies. Based on these illustrations, the financial institution approved and funded loans of over $ 1 million. Smith then directed his co-conspirators to send him portions of the PPP funds within days of receipt and used the proceeds for personal expenses, he admitted.

The CARES Bill is a federal law passed March 29, 2020 designed to provide emergency financial aid to millions of Americans suffering from the economic impact of the COVID-19 pandemic. One source of relief from the CARES Act was the PPP’s approval of up to $ 349 billion in unsuccessful small business loans for job retention and certain other expenses. In April 2020, Congress approved over $ 300 billion in additional PPP funding, and in December 2020, Congress approved an additional $ 284 billion in additional funding.

The PPP enables qualified small businesses and other organizations to obtain loans with a term of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses for labor costs, mortgage interest, rents and utilities. The PPP enables the forgiveness of interest and principal when companies spend the proceeds on these expenses within a specified period of time and use at least a certain percentage of the loan on wages and salaries.

This case has been investigated by SBA-OIG, FBI, FDIC-OIG and IRS-CI. Litigation attorneys Laura Connelly and Leslie S. Garthwaite of the Criminal Division’s fraud department and US assistant attorney Stephen Ingraham of the Eastern District of Wisconsin are pursuing the case.

The Fraud Department oversees the prosecution of fraud programs that exploit the PPP. In the months since the PPP began, fraud lawyers have prosecuted more than 100 defendants in more than 70 criminal cases. The fraud department has also seized more than $ 60 million in cash receipts from fraudulently obtained PPP funds, as well as numerous real estate and luxury goods purchased with such proceeds. Further information can be found at:

Anyone with information about suspected COVID-19 fraud can report this by calling the National Justice Department’s Disaster Fraud hotline at 866-720-5721 or using the NCDF web complaint form at https: //www.justice. gov / disaster fraud / ncdf disaster complaint form.