Eleven people charged with submitting fraudulent PPP applications
OMAHA, Neb. -- On Wednesday, agents from the FBI Omaha Field Office, with the assistance of the Omaha Police Department and the FBI Atlanta, Las Vegas, and Minneapolis field offices, arrested eleven individuals charged with submitting fraudulent applications seeking Payroll Protection Program funds and Economic Injury Disaster Loans.
According to United States attorney Jan Sharp, the defendants are charged in an indictment returned by a Federal Grand Jury for the District of Nebraska. The unsealed indictment charges the eleven defendants with Conspiracy to Commit Wire Fraud, Wire Fraud, and Money Laundering. The defendants allegedly submitted fraudulent applications seeking Paycheck Protection Program funds, Economic Injury Disaster Loans and advances in the amount of at least $7,642,651 and obtained loans and advances in the amount of approximately $2,467,116.
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a federal law enacted in March 2020 and designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of forgivable loans to small businesses to preserve jobs by paying for certain expenses. This financial relief was referred to as the Paycheck Protection Program (“PPP”).
The CARES Act also expanded the Economic Injury Disaster Loan (“EIDL”) program, which is an SBA program that provides low-interest financing in regions affected by declared disasters. The CARES Act authorized the SBA to provide EIDLs of up to $2 million to eligible small businesses experiencing “substantial economic injury” due to the COVID-19 pandemic.
Charged in the indictment are Ramel Thompson, Carl Estwick, Jackie Harper, Tarysh G. Hogue, Richard L. Kelly, Lenfield Kendrick, Henry T. Lewis, Trevor A. McNeil, Michael A. Perkins, Michael A. Perkins, Jr., Shawn Prater. All but McNeil and Kendrick were taken into custody in Omaha. McNeil was arrested by FBI agents in Atlanta. Kendrick was arrested by FBI agents in Las Vegas.
As part of the scheme, Thompson allegedly provided direction and guidance to other participants concerning how to fraudulently obtain funds, prepared false applications and false supporting documents on behalf of other participants and submitted a fraudulent application for an EIDL loan. Estwick, Harper, Hogue, Kelly, Kendrick, Lewis, McNeil, Perkins, Perkins, Jr., and Prater allegedly submitted applications, signed false supporting documents, and received PPP and EIDL loan proceeds that had been fraudulently obtained for fourteen businesses. The Indictment alleges that none of those businesses had the number of employees specified on PPP applications for whom they paid salaries and payroll taxes, or had the specified number of paid independent contractors; none of the businesses had the average monthly payroll expenses specified on PPP applications; and the loan proceeds were not intended to be used, and were not used, only for business-related purposes that were allowed by the terms of the loans, such as payroll, rent, utilities and mortgage interest for the applicant businesses.
In addition to the arrest, 15 searches were also conducted. Those searches resulted in the seizure of $64,000 in cash, $196,000 in seized bank accounts, 7 handguns, and 1 shotgun.
United States Attorney Jan Sharp commented: “In March 2020, at the outset of the COVID-19 pandemic, the Department of Justice prioritized the investigation and prosecution of COVID-related fraud schemes. This case, and others like it in this District and across the country, are the result of that concerted effort. The United States Attorney’s Office and our law enforcement partners will continue to hold accountable persons who attempted to exploit the programs that Congress enacted to help workers and businesses who were struggling from the effects of the pandemic.”
FBI Omaha Special Agent in Charge Eugene Kowel said “FBI Omaha and our federal, state, and local partners are committed to protecting the integrity of government assistance programs. We will not tolerate PPP funds being fraudulently used to line someone’s pockets while citizens of our country were battling a pandemic. Today’s arrests send the message that the FBI will remain vigilant in making sure federal assistance funds are used as intended.”
The penalties for wire fraud and wire fraud conspiracy are up to twenty years in prison and a $250,000 fine. The penalty for money laundering is up to ten years in prison and a fine of $250,000. According to the indictment, upon conviction of one or more of the offenses, the defendants will forfeit any property constituting, or derived from proceeds they obtained directly or indirectly as the result of the violations.
This case was investigated by the Small Business Administration and the Federal Bureau of Investigation.