Fraudster Pleads Guilty to COVID-19 Loan Fraud Scheme

Summary

A press release published October 23, 2020 on the Eastern District of Virginia U.S. Attorney's Office site, stating that Joseph Cherry of Norfolk pleaded guilty to wire fraud and theft of government property. According to court documents cited in the release, Cherry submitted multiple applications for Paycheck Protection Program and Economic Injury Disaster Loan loans in March and April 2020 and gave false information about claimed businesses, income, employment and a criminal record. The release states that Cherry withdrew over $100,000 in cash and a cashier's check in April 2020. It states a maximum penalty of 30 years in prison and refers to Case No. 4:20-cr-27.

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Full text

NEWPORT NEWS, Va. – A previously convicted felon pleaded guilty today to engaging in a COVID-19 related loan fraud scheme with losses of $196,000.
According to court documents, Joseph Cherry, 40, of Norfolk, who was previously convicted of federal felony charges involving fraud and money laundering, engaged in a scheme to obtain COVID-related loan benefits through the Small Business Administration (SBA) and affiliated lenders. In addition to traditional SBA funding programs, the CARES Act, which was signed into law in March 2020, established several new temporary programs and provided for the expansion of others to address the COVID-19 outbreak. Such programs include the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL).
In March and April 2020, Cherry submitted multiple applications for PPP and EIDL loans. Cherry provided false information on the loan applications related to his claimed businesses, income, employment and his criminal record. As a result of these false applications, Cherry fraudulently obtained $196,900 in loan proceeds from the U.S. Treasury into a bank account he established at Langley Federal Credit Union. In a brief period of time in April 2020, Cherry withdrew over $100,000 in the form of cash and a cashier’s check and made various purchases inconsistent with the purposes of the PPP and EIDL programs.
Cherry pleaded guilty to wire fraud and theft of government property. He faces a maximum penalty of 30 years in prison when sentenced on March 11, 2020. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia; Hannibal “Mike” Ware, Inspector General of the Small Business Administration (SBA); Martin Culbreth, Special Agent in Charge of the FBI’s Norfolk Field Office; Kelly R. Jackson, Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation (IRS-CI); and Peter R. Rendina, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service, made the announcement after U.S. Magistrate Judge Lawrence R. Leonard accepted the plea.
Assistant U.S. Attorney Brian J. Samuels is prosecuting the case.
A copy of this press release is located on the website of the
U.S. Attorney’s Office
for the Eastern District of Virginia. Related court documents and information are located on the website of the
District Court
for the Eastern District of Virginia or on
PACER
by searching for Case No. 4:20-cr-27.

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