The Department of Justice (DOJ) announced the sentencing of three men in the Middle District of North Carolina for fraudulently seeking over $2.7 million in Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDLs) guaranteed by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act.
According to the DOJ, Joseph Cartlidge, David Redfern and Eric McMiller participated in a scheme led by James Stote who “recruited the defendants to apply for fraudulent PPP loans for registered businesses, with the understanding and agreement they would provide a portion of the PPP loan proceeds to their recruiter.” The government accused the defendants of submitting PPP loan applications that misrepresented the number of employees and the average monthly payroll expenses of their various businesses. The defendants were also accused of fraudulently applying for EIDLs, misrepresenting the number of employees, gross revenues, and costs of goods sold for each business.
In total, the defendants sought over $2.7 million in PPP loans and EIDL funds. Cartlidge was sentenced to 72 months in prison; Redfern was sentenced to 60 months in prison; and McMiller was sentenced to 66 months in prison. Each defendant was also ordered to pay $498,657 in restitution.
In May of 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force in an effort to combat and prevent pandemic-related fraud. The Government has prosecuted over 150 defendants in more than 95 criminal cases, seizing over $75 million in cash as well as real estate properties and luxury items purchased with proceeds derived from fraudulently obtained PPP funds.
The government is publicly asking that anyone with information about allegations of attempted fraud involving COVID-19 to report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations and PPP investigations. If you need assistance with such a matter, please contact us today.
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