Three Individuals Sentenced for $3.5M COVID-19 Relief Fraud Scheme

Summary

A press release published 2024-02-07 by the U.S. Attorney's Office for the District of Idaho announcing sentences for three defendants in a COVID-19 fraud ring involving PPP loans issued by a Boise financial institution. The office states that Khadijah X. Chapman, 59, of Atlanta was sentenced to three years and 10 months, Daniel C. Labrum, 42, of South Jordan, Utah, to two years, and Eric J. O’Neil, 58, of Bethel, Connecticut, to two years and three months. According to court documents and trial evidence described in the release, the defendants worked with co-conspirators to obtain PPP loans for fictitious businesses in 2020 and 2021, collectively obtaining approximately $3.5 million. It states that Chapman was convicted by a jury in November 2023 of bank fraud and that Labrum and O'Neil pleaded guilty to bank fraud.

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BOISE – Three defendants were sentenced yesterday for fraudulently obtaining and misusing Paycheck Protection Program (PPP) loans that were issued by a Boise financial institution and that were guaranteed by the U.S. Small Business Administration under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, U.S. Attorney Josh Hurwit announced today.  The defendants’ conduct was part of larger COVID-19 fraud ring.
Khadijah X. Chapman, 59, of Atlanta, was sentenced to three years and 10 months in prison; Daniel C. Labrum, 42, of South Jordan, Utah, was sentenced to two years in prison; and Eric J. O’Neil, 58, of Bethel, Connecticut, was sentenced to two years and three months in prison.
According to court documents and evidence presented at trial, Chapman, Labrum, and O’Neil fraudulently obtained PPP loans for fictitious businesses in 2020 and 2021.  The defendants worked with co‑conspirators to falsify information and submitted fraudulent documents to financial institutions in Boise and elsewhere to collectively obtain approximately $3.5 million in relief funding intended for small businesses struggling with the economic impact of COVID-19.
Chapman
was convicted after a jury trial in November 2023
of bank fraud. Labrum and O’Neil pleaded guilty in 2023 to bank fraud.
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, Special Agent in Charge Thomas M. Fattorusso of IRS Criminal Investigation (IRS:CI) New York, Assistant Director Michael D. Nordwall of the FBI’s Criminal Investigative Division, Special Agent in Charge Matthew Miraglia of the FBI Buffalo Field Office, Inspector General Gail S. Ennis of the Social Security Administration Office of the Inspector General (SSA-OIG), Special Agent in Charge Sharon B. MacDermott of SSA-OIG, and Inspector in Charge Ketty Larco-Ward of the U.S. Postal Inspection Service (USPIS) Boston Division joined U.S. Attorney Hurwit in making the announcement.
IRS:CI, the FBI, SSA-OIG, and USPIS investigated the cases.
Trial Attorneys Jennifer Bilinkas and Tamara Livshiz of the Justice Department’s Criminal Division’s Fraud Section and Assistant U.S. Attorney Sean Mazorol for the District of Idaho prosecuted the cases.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department 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 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
www.justice.gov/coronavirus
.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866‑720‑5721 or via the NCDF Web Complaint Form at
www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
.
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