East Granby Woman Who Stole in $1.1 Million Pandemic Relief Program Scheme is Sentenced

Summary

Karen Gaston, 45, of East Granby, Connecticut, was sentenced on November 13, 2025 by U.S. District Judge Sarah F. Russell to three years of probation, including four weekends of incarceration, 10 months of home detention and 500 hours of community service, for defrauding pandemic relief programs of more than $1.1 million. According to the District of Connecticut U.S. Attorney's Office, Gaston filed PPP and EIDL applications for entities including LNK, Elegant Clinical, Ruby Red LLC and Diamond Shine LLC that misstated their operations, employees and wages and included fraudulent tax returns. Gaston received $1,163,910 and spent it on personal expenditures including travel, jewelry and paying off a mortgage. The judge ordered full restitution, Gaston forfeited a $39,521.63 Harry Winston ring, and Gaston pleaded guilty on June 12, 2025 to wire fraud and illegal monetary transactions.

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Press Release

East Granby Woman Who Stole in $1.1 Million Pandemic Relief Program Scheme is Sentenced

Thursday, November 13, 2025

For Immediate Release

U.S. Attorney's Office, District of Connecticut

David X. Sullivan, United States Attorney for the District of Connecticut, announced that KAREN GASTON, 45, of East Granby, was sentenced today by U.S. District Judge Sarah F. Russell in New Haven to three years of probation for defrauding COVID-19 pandemic relief programs of more than $1.1 million. During her probation, Gaston was ordered to serve four weekends of incarceration, 10 months in home detention, and 500 hours of community service.

In March 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act provided emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of forgivable loans to small businesses for job retention and certain other expenses through the Paycheck Protection Program (“PPP”). The PPP was overseen by the U.S. Small Business Administration (“SBA”), and individual PPP loans were issued by private lenders, which received and processed PPP applications and supporting documentation, and then made loans using the lenders’ own funds, which were guaranteed by the SBA. The CARES Act also authorized SBA to distribute Economic Injury Disaster Loans (“EIDLs”), which provided working capital to eligible small businesses, including sole proprietors, to meet operating expenses.

According to court documents and statements made in court, in 2020, Gaston controlled certain entities including LNK, Elegant Clinical, Ruby Red LLC, and Diamond Shine LLC. LNK and Diamond Shine LLC were operational, but shared resources and employees. Ruby Red LLC had only one client and Gaston was its sole employee. Elegant Clinical was no longer operational. Beginning in approximately April 2020, Gaston submitted loan applications to the PPP and EIDL programs that falsely represented the status of the operations, resources, and employees of these entities. She also filed loan applications at separate financial institutions in order to disguise the true nature of her criminal activity.

Specifically, Gaston’s loan applications falsely represented that her businesses were all active and operating concerns; falsely represented the number of employees and the amount of wages purportedly paid by the businesses; included copies of fraudulent tax returns and tax related documents; and falsely represented that a family member, used as an applicant on an application, was a part owner of one of her entities. As least one loan application was submitted after Gaston was arrested for state offenses related to a Medicaid fraud scheme .

Gaston received $1,163,910 in PPP and EIDL loan funds through this scheme. Instead of using the funds for payroll or other operating expenses, she spent the money on personal expenditures, including, cares, travel, food, luxury home goods, expensive jewelry, and paying off her home mortgage.

Judge Russell ordered Gaston to pay full restitution. She also forfeited a ring she purchased in July 2020 from the jeweler Harry Winston for $39,521.63.

On June 12, 2025, Gaston pleaded guilty to wire fraud and making illegal monetary transactions.

This investigation was conducted by the Internal Revenue Service, Criminal Investigation Division. The case was prosecuted by Assistant U.S. Attorney Michael S. McGarry.

Individuals with information about allegations of fraud involving COVID-19 are encouraged to 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 .

Updated November 13, 2025

Topics

COVID-Related Fraud

Disaster Fraud

Financial Fraud

Healthcare Fraud

Component

USAO - Connecticut

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