Five from Milwaukee, Chicago charged for allegedly participating in COVID-19 relief fraud scheme

Coronavirus

(WFRV) – Five people – three from Milwaukee, two from Chicago – have been charged for their alleged participation in a COVID-19 relief fraud scheme.

The United States Department of Justice says the individuals allegedly participated in a scheme to file fraudulent loan applications seeking more than $1.1 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Those charged in an indictment filed in the Eastern District of Wisconsin with bank fraud and money laundering include:

  • Thomas Smith, 46, of Milwaukee
  • Stephen Smith, 42, of Milwaukee
  • Samuel Davis Jr., 40, of Chicago
  • Robert Hamilton, 59, of Milwaukee
  • Jonathan Henley, 52, of Chicago

Officials say the indictment alleges the defendants submitted several fraudulent PPP loan applications to a federally insured financial institution and the SBA in the names of businesses with no actual operations or employees.

In the applications, the defendants allegedly misrepresented the number of employees and payroll expenses. To support the fraudulent applications, the indictment alleges that the defendants submitted fake tax documents. The defendants are alleged to have fraudulently sought over $1.1 million in PPP loan funds. 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29, 2020. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

An indictment is an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

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