Clifton Pape, Sally Jung, Wire Fraud, Texas 2023

Texas Couple Behind My Buddy Loans Guilty of COVID Relief Fraud

TEXARKANA, Texas – A Cleveland, Texas man and woman have pleaded guilty to wire fraud violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Clifton Pape, 47, and Sally Jung, 59, have each pleaded guilty to wire fraud violations before U.S. Magistrate Judge Caroline Craven. As part of their plea agreements, Pape and Jung have agreed to forfeit $680,710.31 and pay up to $3,223,870 in restitution.

According to court documents, Pape and Jung operated a sophisticated telemarketing scheme under the name My Buddy Loans from a house in Cleveland, Texas. In exchange for a fee, My Buddy Loans took personal identifying information from victims and promised to file an application for an agricultural grant, which they said was available to those who owned as little as one acre of land. Instead, Pape and Jung actually filed fraudulent EIDL applications with the SBA that contained the victims’ personal identification information. Based on these fraudulent applications, the SBA issued more than $1.56 million in EIDL Advances to people who were not eligible.

Pape and Jung also submitted applications for an additional $1.44 million in EIDL Advances that were not funded because--among other reasons--the congressionally appropriated funds for the EILD Advance program were exhausted.

Pape and Jung used Square’s credit and debit card processing service to charge third parties the fee. Pape and Jung completed at least 700 successful charges, obtaining at least $700,000 in fees. Pape and Jung then transferred the proceeds of the fraud scheme into a bank account they controlled. On one occasion, Pape used the fraud proceeds to pay a traffic ticket. On another occasion, Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at La Cantera Resort in San Antonio.

“This investigation closed down one of the largest COVID fraud schemes in the country in terms of the number of fraudulent EIDL applications,” said U.S. Attorney Brit Featherston. “Well intended and needed economic assistance (taxpayer dollars) was brazenly stolen from legitimate deserving applicants. We are asking those with information about the My Buddy Loan fraud scheme, including those who believe they may be victims, to call the National Center for Disaster Fraud Hotline at 866-720-5721 or file a complaint using the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.”

This case is a reminder that predators who perpetuate schemes to steal vital funds aimed at mitigating the economic damage to the nation’s small businesses will be brought to justice. The CARES Act is a federal law enacted in March 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization or EIDL advances and low-interest loans to small businesses to meet financial obligations and operating expenses that could have been met had not been for the pandemic.

The U.S. Attorney’s Office for the Eastern District of Texas and the U.S. Secret Service Dallas Field Office investigated the case, with assistance from the SBA Office of Inspector General. Assistant U.S. Attorney Mary Ann Schneider is prosecuting the case.

Source: https://www.justice.gov/usao-edtx/pr/liberty-county-man-and-woman-behind-my-buddy-loans-guilty-fraud-related-covid-relief