District official charged with $ 2 million paycheck protection program and related loan fraud
WASHINGTON – Kenneth Gaughan, 41, from Washington, DC., was arrested and charged by an unsealed criminal complaint today for fraudulently selling over 2.1 million. Dollar luxury sports sedan to buy. Gaughan was also arrested on a today unsealed indictment relating to a separate plot of embezzlement related to his alleged theft of over $ 472,000 in funds from the Catholic Archdiocese of Washington, DC (“ADW”), where he previously served as Assistant Superintendent , has accused.
The announcement was made by Acting US Attorney Michael R. Sherwin, Special Agent Jennifer Boone from the Baltimore Field Office (âFBIâ) of the Federal Bureau of Investigation, and Special Agent Kelly R. Jackson from the Internal Revenue Service-Criminal Investigation , Washington, DC Field Office (âIRS-CIâ) and Special Agent in Charge Kevin Kupperbusch of the US Small Business Administration, Office of the Inspector General, Eastern Region (âSBA-OIGâ).
The criminal complaint related to the PPP / EIDL loan fraud was unsealed today when Gaughan made his first appearance before US Judge G. Michael Harvey in the District of Columbia. The lawsuit alleges Gaughan’s case of bank fraud, a case of theft of government funds, a case of wire transfer fraud and a case of money laundering. The complaint alleges that Gaughan applied for and received approximately $ 2.1 million in PPP and EIDL loans from SBA lenders on behalf of several companies, each falsely claiming to register animals for emotional support. Gaughan allegedly provided false information in order to obtain the loan funds, including forged papers and bank records. Gaughan then uses a portion of the loan proceeds to purchase a 2020 Cruisers Yachts 338 CX 33-foot watercraft, 2020 Kia Stinger, and a townhouse in Northeast, Washington, DC The yacht, the Kia Stinger, Gaughan’s investment account, and Gaughan’s bank accounts. The government is also filing a civil forfeiture suit against a house Gaughan bought with fraudulently obtained earnings and filing onelis pendingon this property.
The Coronavirus Aid, Relief and Economic Security (CARES) Act is federal law that was enacted on March 29th. It is designed to provide emergency financial aid to millions of Americans suffering the economic effects of the COVID-19 pandemic. One source of relief from the CARES bill is approval of up to $ 349 billion. In April 2020, Congress approved over $ 300 billion in additional PPP funding. The PPP enables qualified small businesses and other organizations to obtain loans with a term of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for labor costs, mortgage interest, rent, and utilities. The PPP enables the inheritance of interest and principal when companies spend the proceeds on these expenses within a certain period of time and use at least a certain percentage of the loan on labor costs.
EIDL is an existing SBA program to provide economic relief for companies that are currently experiencing a temporary loss of revenue. EIDL provides loan assistance to small businesses and other eligible facilities up to $ 2 million, including advances of up to $ 10,000. EIDL proceeds can be used to settle fixed debts, payrolls, liabilities, and other bills that could have been paid had the disaster not occurred; however, such loan proceeds are not used to replace lost sales or profits or to expand a business. Unlike certain other types of SBA-guaranteed loans, EIDL funds are issued directly by the U.S. Treasury Department and applicants apply through the SBA through an online portal and application.
“We will not tolerate the exploitation of this national emergency for personal gain,” said Acting US Attorney Michael R. Sherwin. “This office will not allow fraudsters to steal taxpayers’ money to help small businesses currently struggling with the COVID-19 pandemic.”
âDuring this time, many companies are feeling the effects of the pandemic. To help businesses get through, the government offered loans to provide economic relief and enable them to keep their employees on payroll for small businesses and nonprofits that are currently experiencing temporary loss of income. Unfortunately, there are greedy people who choose to abuse these programs to enrich their lifestyles, âsaid Kelly R. Jackson IRS-CI Special Agent in the Washington DC Field Office. “This behavior is being investigated to ensure that crooks are held responsible for stealing this money from those in need.”
“Mr. Gaughan was so encouraged to defraud a church for eight years that he allegedly turned his deception to the government,” said FBI agent in charge, Jennifer Boone, “to steal funds that would be a lifeline in an unprecedented economic climate troubled company should be downturn and greedily use it to satisfy its own materialistic desires. I would like to thank the agents for their careful work on this case. “
“It is ruthless to fraudulently gain access to a program that aims to help small businesses struggling to survive for personal gain and gain,” said Kevin Kupperbusch, SBA’s special envoy for the Eastern Region OIG. âSBA OIG and its law enforcement agencies will aggressively investigate allegations of fraud related to SBA’s programs. I want to thank the US Attorney General and our law enforcement partners for their dedication and pursuit of justice. “
The indictment, also unsealed today, before Judge Harvey Gaughan charged with crimes such as postal fraud, wire fraud and money laundering for committing a separate scheme that defrauded ADW of more than $ 472,000. According to the 12-point indictment, Gaughan was employed as the deputy superintendent of ADW, based in Hyattsville, Maryland. In this role, Gaughan was responsible for recruiting and as a point of contact for contractors who provided various services to ADW. This included contractors who could help ADW implement anti-bullying, crisis intervention, and professional development programs at the approximately 95 ADW-sponsored Catholic schools in Calvert, Charles, Montgomery, Prince George’s, and St. Mary’s Counties in Maryland and Washington, DC Gaughan has also received invoices for services from contractors and has presented those invoices, along with payment requests and receipts, to his supervisors for approval.
The indictment alleges that from at least June 2010 through April 2018, Gaughan arranged for ADW to pay Gaughan-generated bills allegedly created by ADW for anti-bullying and crisis intervention programs, as well as software for sending bulk messages to students and families. To carry out the plan, Gaughan allegedly withheld his ownership and control of three companies, including submitting forms using a pseudonym and falsely confirming that he had not done business with ADW. According to the indictment, Gaughan then submitted fraudulent invoices for these companies and persuaded ADW to write checks for services that Gaughan knew the companies were not providing. Gaughan allegedly opened virtual and private mailboxes to receive the checks ADW issued to pay the fraudulent invoices Gaughan created and sent to ADW officials. The indictment alleges that Gaughan deposited the checks issued by ADW into the bank accounts he controlled and used the money for his own personal use.
The charges in the lawsuit and indictment are merely allegations, and the defendant is presumed innocent until proven guilty in a court of law.
This matter has been investigated by the FBI, IRS-CI and the SBA-OIG. U.S. Assistant Attorney Christine Macey of the U.S. District Attorney’s Fraud Department and U.S. Assistant Attorneys Greg Bernstein and Jessica Collins of the Maryland District Attorney are investigating and pursuing the case, assisted by Paralegal Quiana Dunn -Gordon. Deputy Attorney General Arvind Lal and Attorney General Steven Brantley handle confiscation and confiscation matters.
The public is encouraged to report suspected fraud related to COVID-19 (the coronavirus) by calling the National Center for Disaster Fraud (NCDF) hotline (1-866-720-5721) or emailing the Send NCDF:[email protected].
Citizens and others who suspect fraud or other criminal misconduct related to the pandemic should contact the COVID-19 Pandemic Fraud Hotline by calling 202-252-7022 or emailing U. Report[email protected]