U.S. Department of Labor OIG, Maryland Man, Previously Convicted for Bank Fraud and Aggravated Identity Theft, Facing Federal Charges for Filing Fraudulent Applications for COVID-19 CARES Act Loans and Unemployment Benefits (USAO D-MD 01/23/2023) (2023-01-23)

Summary

A press release from the U.S. Attorney's Office, District of Maryland, dated January 23, 2023, announcing a criminal complaint, filed January 13, 2023, charging Ryan Dales, age 34, of Baltimore, Maryland, with wire fraud related to applications for unemployment insurance benefits, a Paycheck Protection Program loan and an Economic Injury Disaster Loan. According to the affidavit as described, Dales has a 2017 federal conviction for bank fraud conspiracy and aggravated identity theft, and the applications were filed while Dales was at a Baltimore halfway house. It alleges that Dales was paid approximately $25,570 in PUA benefits between August 2021 and September 2021 based on fraudulent IRS documents, and that an EIDL application for Dales Drop, Inc. was denied. A search of Dales' residence recovered two firearms, including a ghost gun.

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                                      Department of Justice
                                       U.S. Attorney’s Office
                                        District of Maryland

FOR IMMEDIATE RELEASE                                                  Monday, January 23, 2023

 Maryland Man, Previously Convicted for Bank Fraud and
Aggravated Identity Theft, Facing Federal Charges for Filing
Fraudulent Applications for COVID-19 CARES Act Loans and
                 Unemployment Benefits
  Defendant Allegedly Filed Fraudulent Applications From a Halfway House,
     including Claiming he was Entitled to Unemployment Benefits while
  Incarcerated, and a Subsequent Search Warrant at the Defendant’s Home
              Recovered Two Firearms, Including a Ghost Gun
Baltimore, Maryland – A federal criminal complaint has been filed charging Ryan Dales, age 34, of
Baltimore, Maryland, with wire fraud, relating to the submission of fraudulent applications for
unemployment insurance (UI) benefits, a Paycheck Protection Program loan, and an Economic
Injury Disaster Loan (EIDL) under the Coronavirus Aid, Relief, and Economic Security (“CARES”)
Act. The CARES Act was a federal law enacted in March 2020 to provide emergency financial
assistance to Americans suffering from the economic effects caused by the COVID-19 pandemic. The
complaint was filed January 13, 2023, and unsealed today.

A search warrant executed at Dales’ residence following his arrest recovered two firearms, including
one privately made firearm, known as a “ghost gun,” suspected fentanyl and suspected drug
manufacturing equipment (including a press, multiple scales, multiple sifters, capsules, baggies, and
other packaging materials) five cell phones, and materials used to make fraudulent identification
documents and access devices. The investigation is continuing.

The defendant is expected to have an initial appearance in U.S. District Court in Baltimore later this
afternoon.

The criminal complaint was announced by United States Attorney for the District of Maryland Erek
L. Barron and Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation,
Baltimore Field Office; and Acting Special Agent in Charge Troy W. Springer, of the National Capital
Region, U.S. Department of Labor, Office of Inspector General.

Financial assistance offered through the CARES Act included loans to small businesses for job
retention and certain other expenses, through the Paycheck Protection Program, administered
through the Small Business Administration (SBA). The SBA also offered an Economic Injury
Disaster Loan (EIDL) and/or an EIDL advance to help businesses meet their financial
obligations. In addition, the CARES Act created the Pandemic Unemployment Assistance (PUA)
program, which expanded states’ ability to provide UI for workers impacted by the COVID-19
pandemic, including workers who otherwise wouldn’t be eligible for UI benefits.

According to the affidavit filed in support of the criminal complaint, Dales has a 2017 federal
conviction for bank fraud conspiracy and aggravated identity theft, for which he was sentenced to 62
months in federal prison. On December 9, 2020, Dales was transferred from prison to a halfway
house in Baltimore, to complete his sentence. Dales was released from custody on June 4, 2021.
The affidavit alleges that on December 15, 2020, soon after Dales arrived at the halfway house, an
application for UI benefits was submitted on his behalf from an IP address that resolved to the
halfway house. The application stated that Dales was self-employed as a barber, and that he stopped
being able to provide services on April 5, 2020, when Dales was actually in federal prison. The
application was denied because Dales had not earned sufficient wages in the previous year to be
eligible for UI benefits.

As detailed in the affidavit, on July 31, 2021, Dales re-opened his UI claim, seeking benefits under
the PUA program. Dales allegedly submitted fraudulent IRS documents to support his PUA
claim. The forms indicated that Dales was the sole member of “KNW Group,” and indicated a gross
profit for the company in 2019 of $144,112.35, with total expenses of $45,031 and a net profit of
$99,081.35. As a result of the documentation, Dales was awarded PUA benefits with an effective
date of December 2020. Between August 2021 and September 2021, Dales was paid approximately
$25,570 on the claim. Subsequent investigation found that the IRS had no record of any such forms
being filed by Dales for the 2019 and 2020 tax years, during which time Dales was incarcerated.

Further, the affidavit alleges that on December 29, 2020, while he was in the halfway house, Dales
filed a fraudulent EIDL application for business “Ryan Dales,” d/b/a “Dales Drop, Inc.” According to
information contained in the application, Dales Drop is an “agriculture” business established on
March 15, 2018 (when Dales was federally incarcerated), with three employees and 2019 gross
revenue of approximately $10,000, and $6,000 in costs of goods sold. On the application, Dales
allegedly answered “No” to the question “Within the last five years, for any felony, have you ever
been convicted, plead guilty, plead nolo contendere, been placed on pretrial diversion, or been placed
on any form or parole or probation (including probation before judgment)? Dales’ 2017 fraud
conviction made him ineligible for EIDL funding. SBA records show that the EIDL application was
ultimately denied due to “unsatisfactory credit history.”

According to the affidavit, in March 2021, again, while Dales was still in the halfway house, a PPP
loan application was submitted online from owner “Ryan Dales,” which asserted over $8,000 in
average monthly payroll for the sole proprietorship, and sought more than $20,000 in funds for
“payroll, rent/mortgage interest, utilities, and covered operations, expenditures, and covered
supplier costs.” The application listed a business start date of “08/2018”—a time when Dales would
have been incarcerated. The application included a purported 2019 IRS Form Schedule C, listing
Dales’ “principal business” as “home improvement,” and listed a gross profit of $113,219, total
expenses of $10,117, and a net income of $103,102. Dales allegedly also responded “yes” to the
question as to whether he did “materially participate in the operation of this business during
2019.” In fact, Dales was incarcerated during all of 2019.

If convicted, Dales faces a maximum sentence of 20 years in federal prison for wire fraud. 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.

A criminal complaint is not a finding of guilt. An individual charged by criminal complaint is
presumed innocent unless and until proven guilty at some later criminal proceedings.

The District of Maryland COVID-19 Fraud Strike Force is one of three strike forces established by
U.S. Attorney General Merrick B. Garland and the U.S. Department of Justice to investigate and
prosecute COVID-19 fraud, including fraud relating to the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act. The CARES Act was designed to provide emergency financial assistance to
Americans suffering the economic effects caused by the COVID-19 pandemic. The strike forces focus
on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and
transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led
and data analyst-driven teams designed to identify and bring to justice those who stole pandemic
relief funds.

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.

United States Attorney Erek L. Barron commended the FBI and DOL-OIG for their work in the
investigation. United States Attorney Barron and Assistant U.S. Attorney Paul A. Riley are
prosecuting the case. Mr. Barron also recognized the assistance of the Maryland COVID-19 Strike
Force Paralegal Specialist Joanna B.N. Huber.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available
to help the community, please visit www.justice.gov/usao/md.

                                                ###
Topic(s):
Coronavirus
Financial Fraud
Component(s):
USAO - Maryland
Contact:
Marcia Lubin (410) 209-4854
                                                                                Updated January 23, 2023


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