DeFrees Drained COVID Funds, Now Facing 21 Months

PORTLAND, Ore. – Michael James DeFrees, 63, of Vancouver, Washington, is trading luxury for a federal prison cell after a brazen scheme to siphon over $2.5 million in COVID-19 relief funds. The U.S. Attorney’s Office for the District of Oregon announced today that DeFrees has been brought to account, but not before enjoying a brief spending spree on the backs of American taxpayers.

Between 2020 and 2022, DeFrees allegedly filed fraudulent applications for Economic Injury Disaster Loans (EIDLs) and Paycheck Protection Program (PPP) loans. The catch? He conveniently omitted a rather significant detail: a 2017 felony conviction in the Western District of Washington for falsifying records in a bankruptcy proceeding – and the fact he was still on probation. DeFrees wasn’t just after a lifeline; he was actively concealing his past to exploit a system designed to help struggling businesses.

Once the funds hit his account, DeFrees didn’t invest in legitimate business ventures. Instead, he laundered a portion of the money through a shell business and indulged in personal expenses. On February 9, 2024, the jig was up. DeFrees received a 21-month federal prison sentence for his fraudulent actions and money laundering. But the court wasn’t done. He was also slapped with a $1.2 million forfeiture order and a hefty $1,346,481 in restitution to the U.S. Small Business Administration (SBA).

The U.S. Attorney’s Office didn’t stop at the sentence. The Asset Recovery Unit moved swiftly, placing liens on DeFrees’s properties and seizing his toys. The auction block saw a 2016 Duckworth boat, a 2006 Ford F350, a 2006 MTI racing boat, two Honda Yeti snow bikes, and a 2011 Land Rover all go under the hammer. The relentless pursuit paid off: the Unit successfully recovered the full restitution and forfeiture judgment amounts – exceeding $2.5 million – from the sale of his assets and one real property.

“Defendants who attempt to shield their assets from collection do so at their own peril, as the U.S. Attorney’s Office will aggressively pursue full payment from defendants who owe restitution to their victims,” stated Katie de Villiers, Chief of the Asset Recovery Unit. “The money recovered for victims—here, the taxpayers—is a direct result of the dedicated investigators, paralegals, and attorneys who work diligently, day in and day out, to ensure justice through their collection efforts.”

The investigation was a collaborative effort, spearheaded by the SBA Office of Inspector General, IRS-Criminal Investigation, the U.S. Treasury Inspector General for Tax Administration (TIGTA), and the FBI. Assistant U.S. Attorney Alex DeLorenzo handled the enforcement of the restitution order and collection of the forfeiture judgment, with crucial support from the U.S. Marshals Service who coordinated the asset seizure and liquidation. DeFrees’s attempt to profit from a national crisis has cost him his freedom, his assets, and his reputation. It’s a clear message: stealing from taxpayers isn’t a victimless crime, and the long arm of the law will eventually catch up.