Disbarred Lawyer Gets 9 Years for $1.4M COVID Relief Scam

NEW YORK, NY – In a brazen scheme to line his own pockets, disbarred lawyer Douglas Raymond Arntsen, 45, of Staten Island, has been sentenced to 9 years in prison for defrauding the US Small Business Administration (SBA) out of over $1.4 million in COVID-19 relief loans.

Arntsen, who was previously convicted of stealing millions from client escrow accounts in 2012, orchestrated the scheme between June and August 2020. He recruited multiple co-conspirators, many of whom trusted him because they believed he was still a licensed attorney.

Arntsen asked his co-conspirators for their personal information, including social security and driver’s license numbers, and used this information to submit false loan applications to the SBA’s Economic Injury Disaster Loan (EIDL) program. The applications falsely claimed that the co-conspirators owned businesses with substantial revenue, often naming individuals who had no legitimate connection to the businesses.

After the loan applications were submitted, Arntsen directed his co-conspirators to lie to the SBA during the loan diligence process. He also instructed them to recruit additional participants to the scheme, and in one case, texted a co-conspirator saying, “Need how you want your bank checks. Your chariot has arrived this morning.”

Arntsen and his co-conspirators obtained at least $1.4 million in fraudulent loans and attempted to obtain hundreds of thousands of dollars more. The scheme was brought to an end after an investigation by the Federal Bureau of Investigation and the Suffolk County District Attorney’s Office.

US Attorney Damian Williams praised the investigative work of the FBI and thanked the Suffolk County DA’s Office for its assistance. Assistant US Attorney Adam Sowlati handled the prosecution.

Arntsen was also sentenced to 3 years of supervised release and ordered to pay restitution of $1,430,200 and to forfeit the same amount. This case is being handled by the Office’s General Crimes Unit.