The Department of Justice continues to investigate pandemic-related fraud. This week, a federal grand jury in the Western District of Tennessee returned an indictment indicting ten more people for their role in schemes to defraud the Economic Disaster Loan Program (EIDL) and Paycheck Protection. Program (PPP).
When it comes to certain types of federal charges, such as potential delinquency charges, the prosecutor will provide the evidence to an independent organization of citizens called a grand jury. Grand juries are generally composed of between 16 and 23 members.
During the grand jury phase, witnesses would likely be called to testify. The prosecution will also provide evidence and a review of the case. The grand jury then votes on whether they believe there is enough evidence to qualify the user as a crime. At least twelve jurors will have to agree to factor an indictment.
An indictment means that a defendant is guilty, but only that a grand jury believes there is sufficient evidence to continue the trial.
According to the Department of Justice, the defendants allegedly received funding under the EIDL and PPP program by submitting fake and fraudulent loan programs that collectively claimed more than $950,000. The defendants allegedly filed claims on behalf of companies and entities they allegedly owned. knowing that the claims contained materially false statements and misrepresentations about, among other things, the number of employees, gross receipts, average monthly payroll, and dates of the company’s status quo. The defendant then allegedly used the loan budget for non-legal purposes. through the PPP or EIDL programs, adding up to their non-public expenditures.
PPP loans and EIDL systems are legal federal stimulus systems under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
PPP loans were designed for small businesses to keep their employees on the Covid-19 payroll. No-cost, unsecured loans can simply help fund wage costs, adding benefits, loan interest, rent, utilities, and employee coverage costs. Small businesses that met the criteria were eligible for loan forgiveness.
The EIDL and EIDL Advance systems were also intended to help small businesses during the Covid-19 pandemic. EIDL loan funds can only be used for current capital and other general operating expenses. EIDL loans were non-repayable and had to be repaid, but the EIDL’s smaller advances did not want to be repaid.
There are many indictments in this case involving ten defendants from other states. Here is a review of the defendants and charges, as detailed through the Department of Justice and in court documents.
Rodrick Flowers, 47, of Memphis, Tennessee, is charged with 12 counts of wire fraud. Flowers was owned by Ezential Consulting.
Stephen Brown, 44, of Memphis, is charged with two counts of wire fraud. Brown, owner and pastor of Light of Glory International Church and Stephen Brown Ministries. He allegedly submitted a fraudulent application to EIDL for Light of Glory International Church, claiming he had ten workers and gross sales of $994,826. He is also accused of submitting a fraudulent PPP application on behalf of Stephen Brown Ministries, for which he received approximately $149,900 in EIDL proceeds.
LaTonya Herman, 44, of Memphis, is charged with two counts of wire fraud. Herman, the owner of LaTonya Herman, allegedly filed a fraudulent EIDL application and a fraudulent PPP application on behalf of her company, claiming she had gross receipts of $187,641. . Herman earned approximately $93,800 in earnings from the EIDL.
Jarvys Jones, 38, of West Memphis, Arkansas, is charged with two counts of cord fraud. Jones, the owner and pastor of the Temple of Refuge, also called Temple of Refuge Inc. , and the Refuge. He allegedly filed a fraudulent EIDL application on behalf of Refuge, alleging that the company established on October 31, 2014, had five workers and had gross receipts of $50,000. He is also accused of submitting a fraudulent PPP application for Temple of Refuge Inc.
Brian Mays, 40, of Olive Branch, Mississippi, is charged with one count of wire fraud. Mays, the owner of A-Mays-in-Trucking, allegedly filed a fraudulent EIDL application on behalf of his company, claiming that it opened on January 1, 2018, and had gross sales of $214,841. Mays earned approximately $107,400 in earnings from the EIDL.
Diane Moss, 60, of Blytheville, Arkansas, is charged with two counts of wire fraud. Moss owned The Station, Diane’s Boutique, and Diane Moss. He allegedly filed a fraudulent EIDL application on behalf of The Station, claiming it opened in January. As of January 1, 2015, it had six workers and gross sales of $210,641. She is also accused of filing a fraudulent PPP application on behalf of Diane Moss. Moss received approximately $99,300 in EIDL revenue and approximately $28,420 in PPP loan income.
Mary Payne, 61, of Memphis, is charged with two counts of wire fraud. Payne, owner of Right Now Staffing LLC, allegedly filed a fraudulent EIDL application and a fraudulent PPP application on behalf of her company, claiming she had 4 workers. and gross receipts of $381,000. Payne received about $4,000 in advances from EIDL.
Krystal Sherrod, 34, of Memphis, is charged with one count of wire fraud. Sherrod, the owner of Krystal Sherrod, allegedly filed a fraudulent EIDL application for her business, claiming she had ten workers and gross sales of $186,740. You earned approximately $83,300 in EIDL income.
Frederick Smith, 54, of Cordova, Tennessee, is charged with two counts of cord fraud. Smith is the owner and pastor of New Life Holiness Church. He is also the owner of Fred Smith Ministries and Frederick Smith, and the bankrupt owner and administrator of New Life Holiness BK. Smith allegedly filed a fraudulent EIDL application on behalf of Fred Smith Ministries, alleging that the company opened its doors on February 1, 2000, had nine workers, and gross receipts of $221,051. Smith is also accused of submitting a fraudulent PPP application for New Life Holiness BK, for which he received approximately $150,275 in PPP loan products.
Cleveland Wells, 65, of Memphis, is charged with two counts of wire fraud. Wells is the owner and pastor of Glory to God Ministries. He also owns Don’t Worry About it Home Solutions, also known as Cleveland Wells Jr. dba Don’t Worry About it Home Solutions. Wells allegedly filed a fraudulent EIDL application on behalf of Glory to God Ministries, falsely representing the identity of its owner and claiming it had five workers and gross receipts of $304,210. Wells is also accused of filing a fraudulent PPP application on behalf of Cleveland Wells Jr. dba Don’t Worry About it Home Solutions, for which he received approximately $149,900 in EIDL earnings.
To facilitate some of those schemes, the defendants allegedly falsified information, adding payroll records. In some cases, defendants filed false tax documents and made false statements about business ownership, adding that they failed to disclose their prior offender convictions and shared control with the companies.
If convicted, they face a maximum sentence of 20 years for wire fraud. Wire fraud refers to stressed communications (in this case, the web) sent across state lines to advertise or commit fraud.
It’s worth noting that the dollar amounts in those cases, unlike some of the previous high-profile cases, are relatively small. This may simply mean that the Department of Justice is sending a warning to those who mistakenly believe that low levels of fraud will keep them off the radar.
Since the emergence of the CARES Act, the Fraud Section has prosecuted more than two hundred defendants in more than 130 criminal cases and seized more than $78 million in monetary proceeds from fraudulently received PPP budgets and from real estate and luxury items purchased with those products. More Data can be found at www. justice. gov/crook-fraud/ppp-fraud.
The government encourages anyone with data on allegations of attempted Covid-19 fraud to report it by calling the Department of Justice’s National Disaster Fraud Center (NCDF) hotline at 866-720-5721 or through the NCDF’s online complaint form.