By Marissa Koblitz Kingman and Matthew D. Lee
The Justice Department recently announced new charges, convictions and sentencings in its ongoing initiative to target pandemic-related fraud, emphasizing the government’s commitment to identify and hold accountable those who allegedly exploited the pandemic for personal gain. Many charges carry a sentence of up to 30 years in prison. The most recent sentences for COVID-19 related fraud varied from five years of probation to 15 years in prison. The federal government’s continued focus on COVID-19 fraud signals that business owners who have benefited from government aid programs and have any concerns regarding their loan or forgiveness applications, their use of the government funds, or incorrect information that was provided to their lender or the government, should be proactive and not wait to be contacted by investigators.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, provided emergency financial assistance through the Paycheck Protection Program (PPP) in the form of forgivable loans to businesses to cover payroll and other specified expenses. PPP loans were awarded for the purpose of helping businesses keep their workers employed during the COVID-19 crisis. The CARES Act also provided government assistance through the Economic Injury Disaster Loan (EIDL) program. Similarly, loans provided through the EIDL program were meant to help small businesses recover from the economic effects of the pandemic.
As the government issued loans to individuals and businesses at a rapid pace, borrowers made mistakes in their applications. In addition, some applicants intentionally made misrepresentations on their loan documents. Within weeks of creating the government assistance programs, the government began investigating those who received the loans.
From the outset, the government vowed to ensure that it would take measures to prevent recipients from fraudulently taking advantage of the CARES Act programs.
Newest Charges Related to Alleged COVID-19 Fraud
- United States v. Amber Singleton and Emanuel Tucker — Amber Singleton and Emanuel Tucker of California were charged in the Central District of California with conspiracy to commit wire fraud and bank fraud, wire fraud, bank fraud, conspiracy to commit money laundering and money laundering, for their roles in an alleged scheme to obtain $15.9 million in PPP and EIDL funds through fraud. The loan applications allegedly contained material misrepresentations about the companies, including the number of employees, average monthly payroll, gross revenue, cost of goods and supporting documents. The top count carries a maximum penalty of 30 years in prison.
- United States v. Karen Sarkisyan, Gayk Akhsharumov, and Babken Chalkadryan — Karen Sarkisyan, Gayk Akhsharumov, and Babken Chalkadryan, all from California, were each charged in the Central District of California with conspiracy to commit wire fraud, wire fraud, conspiracy to commit health care fraud, health care fraud, conspiracy to commit money laundering, and money laundering for their roles in an alleged scheme to submit false Medicare claims. The defendants allegedly used two hospice companies to submit over $9 million in false and fraudulent claims to Medicare. The top count carries a maximum penalty of 20 years in prison.
Recent Convictions Related to COVID-19 Fraud
- Marque Willard Johnson of Florida pleaded guilty in the Middle District of Florida to bank fraud and money laundering as part of a scheme to fraudulently obtain $544,900 in PPP and EIDL funds. The top count carries a maximum penalty of 30 years in prison.
- Lisa Hammell of New Jersey pleaded guilty in the District of New Jersey to conspiracy to defraud the United States and fraud in connection with identification documents as part of a fraudulent COVID-19 vaccination record cards scheme. The top count carries a maximum penalty of five years in prison.
- Scott Davis of Texas pleaded guilty in the Southern District of Texas to wire fraud as part of a scheme to fraudulently obtain $3.3 million in PPP funds. The top count carries a maximum penalty of 20 years in prison.
Recent COVID-19 Fraud-Related Sentencings
- Charles Petty of Georgia was sentenced to three years and 10 months in prison.
- Khalil Gibran Green Sr. of Ohio was sentenced to three years and five months in prison.
- Bern Benoit of California was sentenced to two years and three months in prison.
- Charmaine Redding of Michigan was sentenced to two years and three months in prison.
- Andre Lee Gaines, of Georgia was sentenced to five years of probation.
- Denesseria Slaton of Georgia was sentenced to three years and 10 months in prison.
- Amanda Christian of South Carolina was sentenced to three years and five months in prison.
- Derek Parker of Michigan was sentenced to one year and six months in prison.
- David Belgrave of South Carolina was sentenced to nine months in prison.
- Ryan Whittley of Illinois was sentenced to one year and nine months in prison.
What to Expect Next
The continued focus on fraud involving COVID-19 aid programs, including the newest charges, convictions and sentences, signals that the government is willing to spend its resources to combat all levels of alleged fraud. The investigations and prosecutions related to alleged pandemic-related fraud are only expected to increase in the coming months.
People who received government aid through COVID-19 assistance programs should be mindful that even if their loan amount was small or already forgiven, the government may still investigate and prosecute them for fraud and other related federal crimes. Any borrower who is concerned about compliance with the CARES Act or concerned about potential fraud exposure should consult counsel and not wait to be contacted by law enforcement. Being proactive can mean the difference between a civil issue and spending years in prison. Those who have already received a subpoena or inquiry from any law enforcement agency should immediately consult with counsel who can assess the full potential for civil and criminal exposure prior to responding to the government’s inquiries.