ATLANTA - Acting U.S. Attorney Kurt Erskine issued an update on his office's efforts to combat fraud related to schemes targeting the Paycheck Protection Program (PPP), a loan program created by Congress to help small businesses pay payroll, interest on mortgages, rent, and utilities during the COVID-19 pandemic.
'Along with our federal, state and local law enforcement partners, we continue to remain focused on investigating and prosecuting crimes involving PPP fraud,' said Acting U.S. Attorney Kurt R. Erskine. 'Unfortunately, when criminals steal these funds, they take them out of the hands of those suffering financial hardship. Criminals should understand that the diversion of taxpayer money meant to help small businesses survive this crisis will be fully investigated and prosecuted.'
The U.S. Attorney's Office for the Northern District of Georgia has charged dozens of people with federal crimes related to PPP fraud, including bank fraud, conspiracy, and money laundering. The cases involve a variety of criminal conduct, including business owners who inflated their payroll expenses to obtain larger loans than they otherwise would have qualified for, serial fraudsters who used shell companies to apply for loans, and organized criminal networks that submitted identical loan applications and supporting documents on behalf of more than one company. Most charged defendants not only obtained the loan proceeds under false pretenses, but they also used the loan proceeds for prohibited purposes, such as the purchase of houses, cars, jewelry, and other luxury items.
The PPP fraud cases prosecuted by The U.S. Attorney's Office for the Northern District of Georgia include the following:
United States v. Darrell Thomas, et al.: Twenty-two defendants were charged in an $11.1 million PPP loan fraud scheme orchestrated by Duluth, Georgia resident Darrell Thomas. Thomas and his team applied for fraudulent PPP loans on behalf of 14 businesses located in seven different states. Each loan application claimed that the businesses had between 59 and 69 employees and attached forged IRS tax forms and either a fake bank statement or payroll expense spreadsheet, many of which were substantively identical in multiple fraudulent applications. In reality, none of the businesses had employees or payroll expenses. After the PPP loan proceeds were deposited into the businesses' accounts, the business owners transferred more than $5.5 million to accounts controlled by Thomas, and the funds were used to purchase luxury vehicles, jewelry, and to pay for other personal expenses. As a result of the investigation, the United States seized nearly $4 million in PPP funds, and six participants in the scheme, including Thomas, have pleaded guilty.
U.S. v. Rodericque Jarmaine Thompson, et al.: Nine individuals, including the ringleader, Rodericque Jarmaine Thompson, have pleaded guilty to various federal charges arising from multiple bank-fraud conspiracies designed to obtain PPP loans under false pretenses. Each of the loan applications contained identical false information. For example, each loan application falsely claimed that the business had 16 employees and a monthly payroll of $120,000. Each application was supported by fraudulent quarterly tax returns that claimed the business owner had paid $358,819 in wages per quarter. In the application, the business owner swore that the loan proceeds would be used for payroll, utilities, lease payments, consistent with the PPP rules. The business owners agreed to kickback up to 50 percent of the loan amount to Thompson, as a fee for helping them obtain the loans. After receiving the loans, the business owners wrote multiple checks for $8,333.33 to individuals selected by Thompson, or to their friends and family members. All of the checks claimed to be for 'payroll,' even though the individuals who received the checks were not employed by the businesses.
U.S. v. Alicia Quarterman, et al.: The U.S. Postal Inspection Service and the Drug Enforcement Administration executed a search warrant at the home of Alicia Quarterman in Fayetteville, Georgia in connection with an ongoing narcotics trafficking investigation. A package containing methamphetamine hidden in dog food containers had been mailed to Quarterman's home. As part of the search, law enforcement seized Quarterman's cell phones and discovered a handwritten ledger with the personal and banking information of several individuals. That ledger and a subsequent search of Quarterman's cell phone revealed an alleged Economic Injury Disaster Loans (EIDL) and PPP loan fraud scheme devised by Quarterman and Katrina Lawson of Houston, Texas, a former deputy sheriff for Fulton County. The scheme involved the submission of fraudulent business loan applications on behalf of their friends and family who did not actually own businesses. In total, the scheme involved 50 different individuals, including India Middleton of Accokeek, Maryland (a deputy sheriff in Arlington County, Virginia); James McFarland, Tranesha Quarterman (a former Army military policeman), Darryl Washington, Adarin Jones, and Katie Quarterman of Atlanta, Georgia; Nikia Wakefield of Rockville, Maryland; and Victor Montgomery of Washington, D.C. The ten defendants were indicted on March 16, 2021 on charges of wire fraud, bank fraud, mail fraud, money laundering, and conspiracy to commit wire fraud for attempting to steal over $774,000. The defendants used the loan proceeds to purchase luxury vehicles, a motorcycle, and an all-terrain four-wheeler.
U.S. v. Maurice Fayne: Maurice Fayne, who starred in the reality TV show Love & Hip Hop: Atlanta, pleaded guilty to bank fraud and making false statements to a financial institution in connection with a fraudulent $3.7 million PPP loan application. Fayne falsely claimed that his trucking business had 107 employees and an average monthly payroll of $1,490,200. Fayne certified that the PPP loan proceeds would be used to 'retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the Paycheck Protection Program Rule.' Instead, Fayne used the PPP loan proceeds to pay his past-due child support, pay restitution owed in a previous fraud case, make payments to associates who helped him run a Ponzi scheme, start a new business, purchase jewelry, and lease a Rolls-Royce. In addition, Fayne pleaded guilty to wire fraud and conspiracy in connection with a Ponzi scheme that caused approximately 20 people to invest over $5 million in Fayne's fictitious trucking business. Fayne promised that he would use the investors' money to operate the business. Instead, Fayne used the investors' money to pay his personal debts and expenses, and to fund his extravagant lifestyle.
Indictments and other criminal charges referenced above are merely allegations, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department's response to the pandemic, please visit https://www.justice.gov/coronavirus
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
For further information please contact the U.S. Attorney's Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney's Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.