Milwaukee Man Sentenced for his Role in COVID-19 Relief Fraud Scheme (2021-07-14)

Summary

A U.S. Attorney's Office for the Eastern District of Wisconsin press release dated 2021-07-14 announcing that on July 14, 2021 Stephen Smith of Milwaukee was sentenced to 36 months in prison for fraudulently seeking over $600,000 in Paycheck Protection Program loans. The release states that Smith pleaded guilty on April 12 and admitted seeking the loans on behalf of three different companies through applications with false statements about payroll expenses. It states that Smith directed co-conspirators to send him portions of the funds and was ordered to pay $397,500 in restitution. The FBI, SBA-OIG, FDIC-OIG and IRS-CI investigated the case.

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Full text

Acting U.S. Attorney Richard G. Frohling of the Eastern District of Wisconsin joined Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division and other federal officials in announcing that July 14, 2021 Stephen Smith, (42), of Milwaukee, WI was sentenced today to 36 months in prison for fraudulently seeking over $600,000 in Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Smith, 42, of Milwaukee, pleaded guilty on April 12. According to court documents, Smith admitted that he fraudulently sought, on behalf of three different companies, over $600,000 in PPP loans through applications to an insured financial institution. According to his plea agreement, Smith caused fraudulent loan applications to be submitted that made numerous false and misleading statements about the companies’ respective payroll expenses. Smith then directed his co-conspirators to send him portions of the PPP funds within days of receiving them and used the proceeds for personal expenses.
In addition to the prison sentence, Smith was ordered to pay $397,500 in restitution.
The FBI, SBA-OIG, FDIC-OIG, and IRS-CI investigated the case.
Trial Attorneys Laura Connelly and Leslie S. Garthwaite of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Stephen Ingraham of the Eastern District of Wisconsin are prosecuting the case.
The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases.
The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at:
https://www.justice.gov/criminal-fraud/ppp-fraud
.
In May, 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 Hotline at 866-720-5721 or via the NCDF Web Complaint Form at:
https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
.
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For Additional Information Contact:
Public Information Officer Kenneth Gales 414-297-1700
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