Man gets prison term for defrauding Economic Relief Programs
Published 10:58 am Friday, January 14, 2022
James Waylon Howell, 39, of Knoxville was sentenced on Jan. 13 to 18 months in prison by the Honorable R. Leon Jordan, in the United States District Court for the Eastern District of Tennessee at Knoxville.
Howell pleaded guilty to engaging in more than $150,000 in fraud related to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, and to committing money laundering.
“This prosecution highlights the Department of Justice’s commitment to aggressively prosecute those who have defrauded these important programs enacted to provide economic relief to those who have suffered financially as a result of the COVID-19 pandemic,” said United States Attorney Francis M. Hamilton III. “Fortunately, the quick and capable work of our federal partners permitted the recovery of a substantial amount of stolen funds.”
Joe Carrico, FBI agent in charge, spoke of the sentencing and continuing efforts to capture those defrauding these programs.
“Our office will continue to investigate those who fraudulently take advantage of Coronavirus aid funding that is available to help others during the pandemic, and bring them to justice.”
Brian Thomas, assistant special agent in charge of IRS-Criminal Investigation agreed.
“While businesses were suffering and trying their best to make it through the pandemic, others chose greed. The IRS-CI will continue to use its financial expertise to track and recommend prosecution of criminals taking advantage of a crisis.”
The CARES Act is a federal law that was enacted in March 2020 to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. Two primary sources of relief provided by the CARES Act were the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) program. PPP loans consisted of more than $640 billion in forgivable loans to small businesses for payroll, mortgage interest, rent, and utilities. The EIDL program provided low-interest loans to business owners to pay for items like accounts payable and other bills that could not be paid as a result of COVID-19.
As stated in defendant’s filed plea agreement, from April 2020 to June 2020, Howell fraudulently applied for four loans totaling $154,700 through the PPP and EDIL programs. He submitted fraudulent applications under the names of two businesses that did not qualify for the COVID-19 relief funds that Howell sought. Howell submitted two fraudulent applications to financial institutions seeking PPP funds and two fraudulent applications to the Small Business Administration seeking EIDL funds. As part of his fraud scheme, Howell submitted false supporting records, including Internal Revenue Service documents, and made false statements about the number of individuals the companies employed, the revenue generated and the wages paid.
Howell also made false statements about the business entities and the intended use of the loan proceeds. For example, according to the plea agreement, on April 1, 2020, Howell submitted an online application to the Small Business Administration in the name of Advanced Strategy Holdings, LLC, seeking $83,800 in EIDL funds. On the application and in the supporting documents, Howell submitted to the SBA in support of the loan, Howell claimed that Advanced Strategy Holdings employed four individuals, generated $700,000 in gross revenue, incurred $0 in cost of goods sold, and paid wages of $440,000 in the twelve months preceding the COVID-19 pandemic. These claims were all false. This case is the result of an investigation conducted by the FBI and the Internal Revenue Service – Criminal Investigation. Assistant United States Attorney William A. Roach, Jr., who also serves as the Office’s Coronavirus Fraud Coordinator, prosecuted the case.
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, log onto: 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: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.