DENVER – Michael Lain, 56, of Queen Creek, Arizona, is headed to federal prison after being sentenced to 32 months for orchestrating a brazen scheme to steal over $4.1 million in pandemic relief funds. The U.S. Attorney’s Office for the District of Colorado announced the sentence on Wednesday, detailing Lain’s systematic fraud against the Small Business Administration (SBA).
Lain exploited the CARES Act, signed into law in March 2020, which authorized emergency assistance to struggling small businesses. Specifically, he targeted the Economic Injury Disaster Loan (EIDL) program, submitting bogus applications for more than 70 limited liability companies (LLCs). These applications were riddled with lies – inflated employee numbers, fabricated revenue figures, and false promises about how the funds would be used.
The scheme wasn’t about saving businesses; it was about self-enrichment. While claiming the loans were for working capital, Lain allegedly intended to use the money to fund personal expenses, including the purchase of a new home. The SBA, operating out of its Denver Finance Center, approved 70 of these fraudulent applications, funneling a total of $3,830,400 in EIDL proceeds and $336,000 in Economic Injury Disaster Grant (EIDG) funds to Lain’s controlled LLCs.
“Stealing this money is stealing from the generosity of American taxpayers,” thundered U.S. Attorney Cole Finegan. “Because of the pandemic, Americans stepped up to help their neighbors who were in danger of losing their businesses. Together with our law enforcement partners, we are holding criminals accountable for taking this money to line their pockets.” The Secret Service, leading the investigation alongside the SBA-Office of Inspector General, emphasized their commitment to protecting the nation’s financial infrastructure.
While Lain had already repaid a significant portion of the fraudulently obtained loans prior to sentencing, U.S. District Judge William J. Martinez wasn’t letting him off easy. In addition to the 32-month prison sentence, Lain was ordered to pay $622,683.40 in restitution, a $20,000 fine, and will face three years of supervised release after his incarceration. As part of a plea agreement, he also agreed to repay an additional $294,900 obtained through fraudulent Paycheck Protection Program (PPP) applications.
The case, investigated by the United States Secret Service and the SBA-Office of Inspector General’s Colorado-based EIDL Fraud Task Force, serves as a stark reminder that those who preyed on pandemic relief programs will be brought to justice. Assistant U.S. Attorneys Pegeen Rhyne and Patricia Davies spearheaded the prosecution. The Attorney General established the COVID-19 Fraud Enforcement Task Force in May 2021, solidifying the government’s commitment to tackling pandemic-related fraud on all fronts.
Related Federal Cases
- Michael Tagle Santos, Elder Care Fraud, Arizona 2024 · Arizona
- Michael Stewart & Bryant Sewall, $170M Wire Fraud, Colorado 2024 · New Mexico
- Dillon Michael Dean, Bitcoin Fraud, Colorado 2018 · Indiana
- David Young, Procurement Fraud Scheme, Hernando Beach FL, 2023 · Arizona
- Nine Defendants Charged with $100M TRICARE Fraud, Dallas TX, 2023 · Puerto Rico
Key Facts
- Agency: U.S. Secret Service
- Category: Fraud & Financial Crimes
- Source: Official Press Release
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