United States Attorney, Eastern District of Kentucky, "Woodford County Man Sentenced to 42 Months for Fraudulently Obtaining COVID Relief Loans" (Thursday, July 7, 2022)

Summary

A U.S. Attorney's Office, Eastern District of Kentucky release of July 7, 2022 announcing that Randall Rocky Blankenship, Jr., 49, of Versailles was sentenced to 42 months and fined $30,000 by Judge Karen C. Caldwell for conspiring to obtain PPP loans by fraud. In April 2020 he applied for four entities he formed, with an accountant creating fake tax and payroll records showing hundreds of thousands of dollars in quarterly payroll when none had any payroll at all. He obtained $1,323,829 through Kentucky Bank and Independence Bank and spent some of it on casino debt and real estate. Blankenship has repaid the money in full, and the accountant, Tammy Jo Goodwin, also pleaded guilty.

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Department of Justice
Carlton S. Shier, IV
United States Attorney
Eastern District of Kentucky

FOR IMMEDIATE RELEASE CONTACT: Gabrielle Dudgeon
THURSDAY, July 7, 2022 PHONE: (859) 685-4887
www.usdoj.gov/usao/kye E-MAIL: gabrielle.dudgeon@usdoj.gov

Woodford County Man Sentenced to 42 Months for
Fraudulently Obtaining COVID Relief Loans
LEXINGTON, Ky. – A Versailles, Ky., man, Randall “Rocky” Blankenship, Jr.,
49, was sentenced to 42 months in federal prison on Thursday, by U.S. District Judge
Karen C. Caldwell, after pleading guilty to a conspiracy to commit wire fraud to obtain
Paycheck Protection Program loans under false pretenses.

According to his plea agreement, in April 2020, Blankenship submitted four
fraudulent applications for Paycheck Protection Program (PPP) loans for Blankenship RV
Finance Solutions LLC, RSGG Properties LLC, RSGG Holdings LLC, and RSGG
Investments LLC, all business entities he formed. The Paycheck Protection Program was
created as part of the CARES Act, a law passed in March 2020 in response to the COVID-
19 pandemic. Paycheck Protection Program loans were designed to provide an incentive
for small businesses to keep workers on their payroll during the pandemic; these loans
would be forgiven by the United States Small Business Administration, if the borrower
established that loan proceeds were used for payroll, rent, or other approved business
expenses. The amount of the loan was dependent on the business’s payroll.

As part of his fraudulent PPP loan applications, Blankenship, with the assistance of
an accountant, created fake tax documents and payroll records indicating that his
businesses had hundreds of thousands of dollars in quarterly payroll; when in fact, none of
the entities had any payroll expense at all. Blankenship submitted the applications
through Kentucky Bank and Independence Bank; and as a result, he obtained fraudulent
PPP loans totaling $1,323,829. According to his plea, he used some of the funds for a RV
business he owned (which had already received its own PPP loan and was ineligible for
additional loans at the time), as well as personal use, including paying off casino debt and
purchasing real estate. Blankenship has repaid the stolen funds in full.

In a related case before Judge Caldwell, the accountant, Tammy Jo Goodwin, also
pled guilty to conspiring with Blankenship to fraudulently obtain PPP loans. Goodwin’s
sentencing is scheduled for September 26, 2022.

Under federal law, Blankenship must serve at least 85 percent of his prison
sentence. Upon his release from prison, he will be under the supervision of the U.S.
Probation Office for three years. In addition to the term of imprisonment, Blankenship
was ordered to pay a $30,000 fine.

Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky;
Jodi Cohen, Special Agent in Charge, Federal Bureau of Investigation, Louisville Field
Office; Kathy Enstrom, Special Agent in Charge, Federal Deposit Insurance Corporation,
Office of Inspector General (FDIC-OIG); and Stephen Donnelly, Acting Special Agent in
Charge, Eastern Region, Office of Inspector General for the Board of Governors of the
Federal Reserve System and the Bureau of Consumer Financial Protection (FRB), jointly
announced the sentence. The investigation was conducted by the FBI, FDIC-OIG, and
FRB. The United States was represented by Assistant U.S. Attorney Paul McCaffrey.

On May 17, 2021, 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
(NCDF) 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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