In the last week, three women who were alleged to have applied for and received almost $800,000 in Paycheck Protection Program loans guaranteed by the Small Business Administration under the CARES Act have pleaded guilty in federal court, announced Acting U.S. Attorney Clint Johnson.
Leader of the scheme Aleta Necole Thomas, 43, pleaded guilty to two counts of making false statements to a financial institution. Katrina West, 38, and Pepper Jones, 42, pleaded guilty to false statement. In total, the defendants will have to pay restitution in the amount of $795, 158.50. The government previously seized $209, 991.11 from bank accounts held by Thomas pursuant to federal seizure warrants, which will go toward restitution.
“For more than a year, Aleta Thomas applied for and secured Paycheck Protection Program loans under false pretenses,” said Acting U.S. Attorney Clint Johnson. “The nearly $800,000 of taxpayer money Thomas and her accomplices stole should have gone to legitimate small business owners serving and economically enhancing their communities. The U.S. Attorney’s Office and our federal law enforcement partners will investigate and prosecute anyone who misdirects federal emergency assistance in order to illegally enrich themselves.”
“The actions of the defendants sought personal gain at the expense of taxpayers and eligible small businesses,” said Inspector General Hannibal “Mike” Ware. “OIG will aggressively pursue fraud in the PPP and other SBA programs aimed at assisting the nation’s small businesses during the pandemic. I want to thank the U.S. Attorney’s Office for its leadership and dedication to pursuing justice.”
“Those who defraud the federal government of pandemic relief funds will be vigorously pursued and held accountable for their actions,” said Cory Nootnagel, Acting Special Agent in Charge, Western Region, Office of Inspector General for the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection. “I commend our agents and their federal law enforcement partners for their hard work and persistence, which ultimately led to this result.”
In her plea agreement, Thomas stated that on May 27, 2020, she submitted false statements and reports to Cross River Bank when she applied for a Paycheck Protection Program loan. Thomas submitted a borrower application form falsely stating “Coming Correct Community Ministry” had an average monthly payroll of $35,000 and was in operation since Feb. 15, 2020. Thomas further claimed that she had 26 employees for whom she paid payroll taxes or independent contractors as reports in IRS Form 1099-MISC. Thomas also falsely certified that all information in the application and supporting documents was correct and submitted documentation that included forged bank statements and false 2019 IRS Schedule C (Form 1040).
Thomas further stated that on June 16, 2020, she submitted a false statements and reports to First Electronic Bank when she applied for another Paycheck Protection Program loan where she made similar claims.
West admitted that on March 25, 2021, she knowingly made false statements and affirmed their truthfulness when applying for a Paycheck Protection Program loan from Fountainhead Commercial Capital, a matter within the jurisdiction of the U.S. Small Business Administration. In her application and supporting documents, she claimed she owned a small business that was in operation on Feb. 15, 2020, with a gross annual income of $100,000.
Jones admitted that on March 16, 2021, she knowingly made false statements and affirmed their truthfulness when applying for a Paycheck Protection Program loan from Harvest Small Finance, LLC, a matter within the jurisdiction of the U.S. Small Business Administration. In her application and supporting documents, Jones claimed that in 2019, she owned a small business that had been in operation since Feb. 15, 2020, with an annual gross income of $100,000.
The Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection Office of Inspector General; U.S. Department of Treasury Inspector General for Tax Administration; Small Business Administration Office of Inspector General, and the Federal Bureau of Investigation are the investigative agencies. Assistant U.S. Attorneys Kristin Harrington and Cymetra Williams are prosecuting the case.
To learn more about the Justice Department’s COVID response, visit: https://www.justice.gov/coronavirus. For further information on the Criminal Division’s enforcement efforts on PPP fraud, including court documents from significant cases, visit the following website: https://www.justice.gov/criminal-fraud/ppp-fraud.
To report a COVID-19-related fraud scheme or suspicious activity, contact the National Center for Disaster Fraud (NCDF) by calling the NCDF Hotline at 1-866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-for