In a recent case of financial fraud, a Lubbock man named Andrew Travis Johnson was sentenced to 15 years in federal prison for his involvement in a $4 million scheme. The fraud centered around the Paycheck Protection Program (PPP), implemented to provide financial assistance during the COVID-19 pandemic. Johnson admitted to fraudulently applying for and obtaining 27 PPP loans on behalf of various entities, including a fictitious company that never provided any goods or services. Instead of using the funds for their intended purpose, Johnson and his accomplice spent the money on lavish expenses such as home renovations, vacations, cosmetic surgery, and luxury vehicles. As a result of his crimes, Johnson has been ordered to pay restitution and forfeit numerous assets. This case serves as a reminder of the importance of maintaining integrity in financial programs designed to assist those in need.
The Paycheck Protection Program (PPP) was authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted on March 29, 2020, to provide emergency financial assistance to Americans suffering economic hardship due to the COVID-19 pandemic. The PPP provided forgivable loans to small businesses to cover payroll, rent, and other certain business expenses. The program ended in May 2021.
Summary of the Case
Andrew Travis Johnson, a 59-year-old man from Lubbock, Texas, was sentenced to 15 years in federal prison for defrauding pandemic-era financial programs out of nearly $4 million. He pleaded guilty to three counts of bank fraud, one count of aggravated identity theft, and one count of engaging in monetary transactions in property derived from unlawful activity. Mr. Johnson was sentenced by U.S. District Judge James Wesley Hendrix and ordered to pay $4.15 million in restitution and forfeit numerous assets, including multiple luxury cars.
Andrew Travis Johnson was charged with three counts of bank fraud, one count of aggravated identity theft, and one count of engaging in monetary transactions in property derived from unlawful activity.
Plea and Sentencing
Mr. Johnson pleaded guilty to the charges in March and was sentenced to 15 years in federal prison. The sentencing was conducted by U.S. District Judge James Wesley Hendrix.
Restitution and Forfeiture of Assets
As part of his sentencing, Mr. Johnson was ordered to pay $4.15 million in restitution and forfeit numerous assets, including multiple luxury cars.
Details of the Fraudulent Activity
Mr. Johnson’s fraudulent activity involved the fraudulent application for PPP loans, the involvement of multiple entities, and the fabrication of employee lists and IRS forms.
Fraudulent Application for PPP Loans
Mr. Johnson fraudulently applied for and obtained 27 PPP loans totaling almost $4 million. He applied for loans on behalf of three entities: an actual business, an actual nonprofit, and a fictitious entity. The loans were obtained based on false information provided by Mr. Johnson.
Entities Involved in the Fraud
Mr. Johnson applied for loans on behalf of three entities. One was an actual business that provided contract speech and occupational therapy services, another was an actual nonprofit that organized community fundraisers for individuals with intellectual limitations, and the third was a fictitious entity that never provided goods or services and had no employees.
Fabricated Employee Lists and IRS Forms
In the applications for the loans, Mr. Johnson provided fabricated lists of employees for each entity. Some of the employees listed did not exist, and others were clients of the rehabilitation company. He also fabricated IRS forms to support the false claims made in the loan applications.
Misuse of Funds
The funds obtained through the fraudulent PPP loans were misused for various personal expenses, including luxury purchases, home renovations and vacations, cosmetic surgery and college tuition, and equipment for an unrelated business venture.
Mr. Johnson and his co-conspirator used the funds to make luxury purchases, including expensive clothing and cars.
Home Renovations and Vacations
A significant portion of the funds was used for home renovations and vacations. Mr. Johnson and his co-conspirator spent nearly $3.5 million on these personal expenses.
Cosmetic Surgery and College Tuition
Funds were also used for cosmetic surgery and college tuition. These expenses were unrelated to the intended purpose of the PPP loans.
Equipment for Unrelated Business Venture
A portion of the funds was used to purchase equipment for an unrelated business venture. This was a fraudulent use of the funds obtained through the PPP loans.
Additional Fraudulent Activity
In addition to the fraudulent PPP loans, Mr. Johnson also obtained fraudulent independent contractor loans using the identifying information of victims. He forged signatures on loan documents and used the loan proceeds for personal expenses.
Fraudulent Independent Contractor Loans
Mr. Johnson fraudulently obtained $436,524.80 in first and second draw loans for 11 independent contractors, several of whom were related to him or his co-conspirator. Some of the recipients were unaware that Mr. Johnson had used their identifying information to obtain the loans, and they did not receive any of the loan proceeds.
Use of Victims’ Identifying Information
Mr. Johnson used the identifying information of victims to obtain the fraudulent loans. He opened bank accounts under their names, transferred the loan proceeds into the accounts, and obtained debit cards to spend the funds.
Forged Signatures on Loan Documents
Mr. Johnson forged the signatures of victims on loan documents to obtain the loans. This fraudulent activity allowed him to access the loan proceeds for personal use.
Hope Leticia Hastey, a 50-year-old woman who had a relationship with Mr. Johnson, was involved in the fraudulent activity. She has been charged with misprison (concealment) of Mr. Johnson’s felonies and is set to enter a plea. She remains innocent until proven guilty in a court of law.
Charges against Hope Leticia Hastey
Hope Leticia Hastey has been charged with misprison (concealment) of Mr. Johnson’s felonies.
Plea and Innocence Until Proven Guilty
Ms. Hastey has not entered a plea yet and is presumed innocent until proven guilty in a court of law.
Investigation and Prosecution
Multiple agencies were involved in investigating and prosecuting Mr. Johnson’s fraudulent activity.
The Federal Bureau of Investigation’s Dallas Field Office and IRS – Criminal Investigations conducted the investigation into Mr. Johnson’s fraudulent activity. The investigation received assistance from the Internal Revenue Service and Homeland Security Investigations.
Assistant U.S. Attorneys Ann Howey prosecuted the case with assistance from Assistant U.S. Attorneys Beverly Chapman, Saurabh Sharad, and John de la Garza.
Reporting Fraud and Abuse
Individuals who suspect waste, fraud, or abuse of pandemic-era financial programs, including the PPP, or violations of pandemic-related legislation can report it to the Pandemic Response Accountability Committee (PRAC). The PRAC provides a hotline for reporting suspected fraudulent activity.
The Pandemic Response Accountability Committee
The Pandemic Response Accountability Committee (PRAC) is responsible for overseeing and coordinating the detection and prevention of fraud, waste, abuse, and mismanagement of pandemic funds. They provide a hotline for reporting suspected fraudulent activity.
To report suspected fraudulent activity, individuals can visit the Pandemic Response Accountability Committee’s website at https://www.pandemicoversight.gov/contact/about-hotline.
The case of Andrew Travis Johnson highlights the severe consequences faced by individuals who defraud financial programs meant to provide economic assistance during times of crisis. Mr. Johnson’s fraudulent activity, involving the fraudulent application for PPP loans and the misuse of funds, resulted in a 15-year prison sentence and significant financial penalties. The investigation and prosecution of Mr. Johnson’s fraudulent activity involved multiple agencies working together to ensure accountability. Reporting suspected fraudulent activity is crucial in preventing and detecting fraud, waste, and abuse of financial programs.