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Springfield MO Business Owner Sentenced for Wire Fraud Scheme
SPRINGFIELD, Mo. – In a shocking turn of events, John Michael Felts, 49, owner of several restaurants in Springfield and Branson, Mo., was sentenced to two years in federal prison without parole for his role in a nearly $14 million wire fraud conspiracy.
Felts was sentenced by U.S. District Judge Stephen R. Bough to two years in federal prison and ordered to pay $8,173,736 in restitution. The court also ordered Felts to forfeit to the government personal property and real estate purchased with the proceeds of the wire fraud conspiracy, including four parcels of real estate in Springfield, six vehicles, a yacht, two Rolex watches, five additional pieces of valuable jewelry, a 1952 Topps Jackie Robinson baseball card, a 1980-1981 Topps Larry Bird, Julius Erving, and Magic Johnson card signed by all three players, and a 1909-1911 Ty Cobb baseball card.
Felts pleaded guilty on July 31, 2023, to one count of conspiracy to commit wire fraud and one count of wire fraud. The purpose of the CARES Act was to provide emergency financial assistance due to the economic impact caused by the COVID-19 pandemic. However, Felts and another person, a San Antonio, Texas, resident identified in court documents as ‘Individual-1,’ applied for PPP loans and Economic Injury Disaster loans and grants for various businesses they controlled, making material misrepresentations about the businesses in the applications.
The conspirators submitted fake and forged documents as a part of the application process and created fake businesses that they controlled, under fake identities they created. They then used these fake businesses and identities, as well as false financial and business documents, to apply for loans.
Felts did not utilize the loan proceeds for the purpose he represented to the lenders in the application process. Instead, he utilized proceeds for his own personal benefit, including vehicles, a yacht, jewelry, rare sports cards, and construction related to personal residences, and for the benefit of other businesses he controlled.
$2 Million Fraudulent Diagnostic Equipment, Inc., Loans: For example, in January 2020, Felts and Individual-1 set up a business, Diagnostic Equipment, Inc., for the purpose of representing it as a legitimate business, when in fact it was a fake entity created to obtain loans under the CARES Act.
The CARES Act authorized the Small Business Administration to provide low-interest Economic Injury Disaster Loans to eligible small businesses that experienced substantial financial disruption due to the economic impact of the COVID-19 pandemic. Additionally, the Paycheck Protection Program (PPP) authorized forgivable loans to small businesses to retain workers and maintain payroll, and make mortgage interest payments, lease payments, and utility payments.
Under the PPP, both the principal and interest on those loans were eligible for forgiveness. However, Felts and Individual-1 made material misrepresentations about the businesses in the applications, including the purpose of the funding, and submitted fake and forged documents as a part of the application process.
Key Facts
- State: Missouri
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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