In a recent case of pandemic relief funds fraud, 41-year-old Russell Bryant Lester of Boulder has been sentenced to 30 months in prison and ordered to pay restitution totaling $584,851.75. Lester filed false applications to obtain loans and grants meant to support small businesses affected by the COVID-19 pandemic. He also made false statements to collect pandemic unemployment benefits from the state of Colorado. The investigation, led by the FBI and Small Business Administration, revealed that Lester used the funds for personal expenses and to pay off unrelated debts. Assistant United States Attorneys Craig Fansler, Sarah Weiss, and Rebecca Weber are handling the prosecution of this case. The sentencing serves as a reminder that criminal activity to cheat the system will not be tolerated as authorities continue to combat and prevent pandemic-related fraud.
In recent years, the world has been grappling with the devastating effects of the COVID-19 pandemic. As businesses shuttered and individuals faced financial hardships, governments around the world implemented relief measures to support those affected. The United States government, in particular, enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which aimed to provide emergency assistance to small business owners impacted by the pandemic. Unfortunately, some individuals took advantage of this crisis by engaging in fraudulent activities to obtain funds meant for those in need.
One such case of COVID-19 fraud involves Russell Bryant Lester, a 41-year-old resident of Boulder, Colorado. Lester has recently been sentenced to 30 months in prison for defrauding pandemic relief funds by filing false applications. In addition to his prison sentence, Lester has been ordered to pay restitution in the amount of $584,851.75. This case serves as a reminder that the government will not tolerate individuals who seek to exploit a crisis for personal gain.
The Fraudulent Activities
Lester’s fraudulent activities involved making false statements to obtain funds from the Small Business Administration (SBA) through the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. From March 2020 to August 2020, Lester submitted false applications for EIDL and PPP loans, ultimately receiving a total of $217,400 in EIDLs, $16,000 in EIDL grants, and $317,975 in PPP loans. He also attempted to secure an additional PPP loan of $297,200, which was not funded.
Furthermore, Lester made false statements to the Colorado Department of Labor and Employment to collect pandemic unemployment benefits. He falsely claimed that he was not employed and had not received pay since January 15, 2020. As a result, he collected $17,578 in unemployment benefits from the state of Colorado.
The CARES Act
To understand the significance of Lester’s fraudulent activities, it is essential to delve into the details of the CARES Act. Enacted on March 27, 2020, the CARES Act was designed to provide economic relief amidst the COVID-19 pandemic. The SBA played a crucial role in administering two primary sources of funding for small businesses: the PPP and the EIDL program. The PPP aimed to help businesses keep their workforce employed during the crisis, while the EIDL program provided financial assistance to businesses experiencing substantial economic injury.
Wire Fraud Charges
Lester pleaded guilty to one count of wire fraud on November 15, 2020. Wire fraud involves using electronic communication to execute a scheme to defraud others of money or property. In this case, Lester’s fraudulent activities, including filing false loan applications and obtaining funds through deceit, constituted wire fraud. Wire fraud is a serious offense that carries significant penalties, including imprisonment and fines.
False Statements to Obtain Loans
One aspect of Lester’s fraudulent activities involved making false statements in his loan applications to secure funds from the SBA. By providing misleading information about his financial situation and the impact of the pandemic on his business, Lester deceived the SBA into approving his loan applications. This type of fraud not only harms the SBA but also diverts funds away from legitimate businesses in need.
False Statements to Collect Unemployment Benefits
In addition to the fraudulent loan applications, Lester also made false statements to the Colorado Department of Labor and Employment to collect pandemic unemployment benefits. By claiming that he was unemployed and not receiving any wages due to the COVID-19 pandemic, Lester obtained unemployment benefits to which he was not entitled. This kind of fraudulent activity not only defrauds the government but also undermines the integrity of the unemployment benefits program.
Funding Sources for Small Businesses
The PPP and EIDL program were instrumental in providing financial assistance to small businesses during the pandemic. The PPP aimed to help businesses retain their employees by providing forgivable loans that could be used to cover payroll costs, rent, and utilities. On the other hand, the EIDL program provided businesses with loans to alleviate economic injury resulting from the pandemic. It is crucial to note that these funds were intended for eligible businesses facing genuine financial hardship, not for individuals seeking to exploit the crisis.
As part of his fraudulent activities, Lester used portions of the EIDL and PPP loan proceeds for non-eligible expenses. Instead of utilizing the funds for their intended purposes, such as covering payroll costs and essential business expenses, Lester used the money to pay off unrelated debts and extend high-interest loans to other individuals. This misuse of funds not only demonstrates a lack of integrity but also undermines the purpose of the relief programs.
The Sentencing and Supervised Release
On February 7, 2023, Judge Daniel D. Domenico sentenced Lester to 30 months in prison for his involvement in COVID-19 fraud. In addition to his prison term, Lester has been ordered to serve a term of three years on supervised release. The sentencing aims to hold Lester accountable for his actions and deter others from engaging in similar fraudulent activities. The case serves as a reminder that the government is committed to prosecuting individuals who exploit a crisis for personal gain.
In conclusion, the case involving Russell Bryant Lester sheds light on the consequences of COVID-19 fraud. Lester’s fraudulent activities, including making false statements to obtain loans and collect unemployment benefits, highlight the need for vigilance and accountability in the distribution of relief funds. By addressing and prosecuting such fraudulent activities, the government aims to protect the integrity of the relief programs and ensure that funds reach those who genuinely need them.