Nevada Resident Pleads Guilty To COVID-19 Fraud Scheme

Learn about a Nevada resident who pleaded guilty to a COVID-19 fraud scheme, fraudulently seeking over $1 million in loans through the PPP. Discover the details and legal proceedings involved in this case.

In a recent case of fraud, a Nevada resident, Karen Chapon, pleaded guilty to fraudulently seeking over $1 million in loans through the COVID-19 Paycheck Protection Program (PPP). Chapon, also known as Karen Hannafious, submitted six fraudulent loan applications to multiple financial institutions for her companies, making false statements about their business operations and payroll expenses. She also used false documents, including fake federal tax filings, to support the loan applications. As part of the scheme, Chapon falsely claimed that she had not been convicted of a felony in the past five years, despite having pleaded guilty to felony fraud offenses in 2016. In total, she received four loans amounting to approximately $596,931 and used the fraudulently obtained funds for personal expenses, including purchasing a Mercedes-Benz SUV. Chapon has pleaded guilty to one count of bank fraud and is facing a maximum penalty of 30 years in prison, a fine, restitution, and a term of supervised release. Sentencing is scheduled for November 29, 2023. This case highlights the ongoing efforts to combat fraud related to the COVID-19 pandemic and the consequences individuals may face for exploiting relief programs.

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U.S. Department of Justice

The U.S. Department of Justice (DOJ) is a federal government agency responsible for enforcing the laws of the United States and ensuring the fair and impartial administration of justice. The DOJ is headed by the Attorney General, who is the chief law enforcement officer of the federal government. The department is organized into various divisions and offices that carry out its mission and provide services to the public.

About The Attorney General

The Attorney General is the head of the U.S. Department of Justice and serves as the chief law enforcement officer of the federal government. The Attorney General is responsible for representing the United States in legal matters, providing legal advice to the President and other government agencies, and overseeing the enforcement of federal laws. The current Attorney General is appointed by the President and confirmed by the Senate.

Organizational Chart

The DOJ is organized into multiple divisions and offices that are responsible for specific areas of law enforcement and legal services. These divisions and offices include the Criminal Division, Civil Division, Appellate Division, Administrative Division, and more. The organizational chart provides a visual representation of the structure of the department and the relationships between its different components.

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As a federal agency, the DOJ receives funding from Congress to carry out its mission and operations. The department’s budget is determined through the congressional appropriations process and is used to support its various programs and initiatives. The budget and performance history provides information on the department’s financial resources and how it has allocated those resources over time.

Privacy Program

The DOJ is committed to protecting the privacy and personal information of individuals in accordance with applicable laws and regulations. The department has implemented a comprehensive privacy program that includes policies, procedures, and safeguards to ensure the responsible collection, use, and disclosure of personal information. The privacy program aims to promote transparency, accountability, and the protection of individual privacy rights.


The DOJ provides various resources for the public to stay informed about its activities and initiatives. The news section includes press releases, speeches, videos, photo galleries, blogs, and podcasts that cover a wide range of topics related to the department’s work. These resources offer insights into the DOJ’s enforcement efforts, legal developments, and important announcements.

Press Releases

Press releases issued by the DOJ provide updates on significant cases, investigations, and policy changes. They highlight the department’s efforts to combat crime, protect civil rights, and ensure the rule of law. Press releases often include details about specific individuals or organizations involved in criminal activities, as well as the actions taken by law enforcement agencies.


Speeches delivered by DOJ officials offer insights into the department’s priorities, policies, and initiatives. They provide opportunities for officials to communicate directly with the public, legal professionals, and other stakeholders. Speeches cover a wide range of topics, including criminal justice reform, national security, civil rights, and more.


The DOJ produces videos that provide visual and auditory insights into its work. These videos may include interviews, documentaries, public service announcements, and educational materials. They offer a multimedia approach to understanding the department’s mission, enforcement efforts, and legal developments.

Photo Galleries

The DOJ’s photo galleries feature images that capture significant events, ceremonies, and activities related to the department’s work. These visuals provide a behind-the-scenes look at law enforcement operations, court proceedings, and other aspects of the justice system. The photo galleries aim to enhance public understanding and engagement with the DOJ’s work.


The DOJ’s blogs offer an informal platform for department officials and subject matter experts to share their perspectives and insights on various legal and policy issues. Blog posts cover a wide range of topics, including criminal justice reform, civil rights, national security, and more. They provide an opportunity for dialogue and discussion on important issues facing the justice system.


The DOJ’s podcasts feature audio recordings of interviews, discussions, and presentations on legal and policy topics. They offer a convenient way for the public to listen to expert analysis and commentary on current issues. Podcast episodes may cover subjects such as criminal investigations, legal procedures, and the role of the DOJ in upholding the law.


The DOJ provides a range of resources to support the public, legal professionals, and other stakeholders in accessing information and services. These resources include guidance documents, forms, publications, information for victims in large cases, the Justice Manual, grants, and employment opportunities.

Guidance Documents

Guidance documents issued by the DOJ provide interpretations, clarifications, and instructions on various legal and policy matters. They offer guidance to prosecutors, law enforcement officials, and the public on how to comply with and enforce federal laws. Guidance documents cover a wide range of topics, including criminal procedures, civil rights, administrative law, and more.


The DOJ provides various forms that individuals, businesses, and organizations can use to access services, apply for benefits, and comply with legal requirements. These forms may be related to immigration, civil rights complaints, Freedom of Information Act (FOIA) requests, and other legal processes. They help streamline the interaction between the public and the DOJ.


The DOJ publishes a wide range of materials, including reports, manuals, handbooks, and research papers. These publications offer in-depth analysis and information on various legal topics and issues. They are valuable resources for legal professionals, scholars, and individuals seeking a deeper understanding of the law and the justice system.

Information for Victims in Large Cases

The DOJ provides information and resources for victims of crime, particularly in large-scale cases. These resources aim to assist victims in understanding their rights, accessing support services, and participating in the criminal justice process. The DOJ works to ensure that victims are treated with fairness, respect, and sensitivity throughout their involvement in the legal system.

Justice Manual

The Justice Manual is a comprehensive guidebook that outlines the policies and procedures followed by the DOJ in its enforcement efforts. It provides guidance to DOJ personnel, legal professionals, and the public on the interpretation and application of federal laws. The manual covers a wide range of topics, including criminal investigations, prosecutions, and legal opinions.


The DOJ administers various grant programs that provide financial assistance to state, local, and tribal governments, as well as nonprofit organizations. These grants support a wide range of activities, including community policing, crime prevention, victim services, and criminal justice reform. The DOJ’s grants help strengthen the capacity of organizations and jurisdictions to address pressing public safety challenges.


The DOJ offers a range of employment opportunities for individuals interested in pursuing careers in law enforcement, legal services, and administration. These opportunities include positions for attorneys, agents, analysts, support staff, and interns. The DOJ provides competitive salaries, benefits, and professional development programs to attract and retain talented individuals committed to upholding justice.

Nevada Resident Pleads Guilty To COVID-19 Fraud Scheme

On Wednesday, August 30, 2023, the U.S. Attorney’s Office for the District of Nevada announced that a Nevada resident had pleaded guilty to a COVID-19 fraud scheme. Karen Chapon, also known as Karen Hannafious, pleaded guilty to fraudulently seeking over $1 million in COVID-19 Paycheck Protection Program (PPP) loans.

Details of the Fraud Scheme

According to court documents, Chapon submitted six fraudulent PPP loan applications to three financial institutions for her companies. From April 2020 to July 2020, Chapon made multiple false statements about her companies’ business operations and payroll expenses, and submitted false documents to support the loan applications, including false federal tax filings. Chapon falsely stated that she had not been convicted of a felony in the past five years, despite pleading guilty to felony fraud offenses in 2016. She received four loans totaling approximately $596,931, which she used for her own benefit, including the purchase of a Mercedes Benz SUV.

Legal Proceedings

Chapon pleaded guilty to one count of bank fraud. U.S. District Judge James C. Mahan scheduled sentencing for November 29, 2023. Chapon faces a maximum statutory penalty of 30 years in prison, a five-year term of supervised release, restitution, and a fine. The sentencing will take into account the U.S. Sentencing Guidelines and other statutory factors.

Overview of the CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020. It was designed to provide emergency financial assistance to individuals and businesses affected by the COVID-19 pandemic. One source of relief provided by the CARES Act is the Paycheck Protection Program (PPP), which authorized forgivable loans to small businesses for job retention and certain other expenses.

Emergency Financial Assistance for COVID-19 Impact

The CARES Act aimed to provide financial relief to individuals and businesses that were impacted by the economic effects of the COVID-19 pandemic. The act recognized the need for immediate assistance to mitigate the financial hardships faced by millions of Americans.

PPP as a Relief Program

The Paycheck Protection Program (PPP) was established under the CARES Act to provide forgivable loans to small businesses and organizations. These loans were intended to help businesses retain employees and cover certain expenses, such as payroll costs, rent, utilities, and interest on mortgages.

Additional Funding Authorization

In April 2020, Congress authorized over $300 billion in additional funding for the PPP, recognizing the ongoing need for financial support for small businesses. This additional funding helped meet the high demand for the program and provided further assistance to businesses affected by the pandemic.

Purpose and Conditions of the PPP

The Paycheck Protection Program (PPP) was designed to provide financial support to small businesses and organizations that were adversely affected by the COVID-19 pandemic. The program aimed to help businesses retain employees and cover essential expenses during this challenging time.

Eligibility for Small Businesses and Organizations

The PPP was available to small businesses with fewer than 500 employees, as well as certain nonprofit organizations, self-employed individuals, and independent contractors. The program aimed to provide relief to businesses of various sizes and sectors.

Loan Terms and Interest Rate

PPP loans had a maturity of two years and an interest rate of one percent. These favorable terms were intended to make the loans accessible and affordable for small businesses and organizations in need of financial support.

Approved Uses of Loan Proceeds

PPP loan proceeds were primarily intended to be used for payroll costs, including wages, salaries, and employee benefits. The loans could also be used for rent, utilities, and interest on mortgages, allowing businesses to cover essential expenses and maintain their operations.

Forgiveness Criteria

To qualify for loan forgiveness, businesses were required to use at least a certain percentage of the loan proceeds towards payroll expenses within a specified time period. This provision aimed to ensure that businesses prioritized employee retention and compensation, promoting economic stability during the pandemic.

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Announcement by Law Enforcement Agencies

Law enforcement agencies, including the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), the Treasury Inspector General for Tax Administration (TIGTA), and the U.S. Small Business Administration Office of Inspector General (SBA-OIG), played critical roles in investigating and prosecuting COVID-19 related fraud cases.

Roles of Justice Department, FBI, TIGTA, and SBA-OIG

The Department of Justice, in coordination with the FBI, TIGTA, and SBA-OIG, worked together to investigate and prosecute individuals and organizations involved in COVID-19 related fraud schemes. These agencies collaborated to detect fraudulent activities, gather evidence, and bring offenders to justice.

Investigation and Prosecution Efforts

Law enforcement agencies conducted thorough investigations into instances of fraud, collecting evidence, conducting interviews, and analyzing financial records. They worked closely with federal prosecutors to build strong cases and ensure that those responsible for fraud were held accountable.

COVID-19 Fraud Enforcement Task Force

To enhance coordination and prevention efforts against COVID-19 related fraud, the Attorney General established the COVID-19 Fraud Enforcement Task Force. This task force brought together resources from various government agencies to combat and prevent pandemic-related fraud.

Establishment and Objectives

The COVID-19 Fraud Enforcement Task Force was established in May 2021 to marshal the resources of the Department of Justice and other agencies across the government. The task force aimed to enhance efforts in investigating and prosecuting domestic and international criminal actors involved in pandemic-related fraud schemes.

Enhanced Coordination and Prevention Efforts

The task force strengthened coordination among government agencies responsible for administering relief programs and combating fraud. It facilitated the sharing of information, resources, and best practices to enhance detection and prevention efforts.

Reporting Fraud Allegations

The public was encouraged to report allegations of attempted fraud involving COVID-19 to the Department of Justice’s National Center for Disaster Fraud Hotline or via the NCDF Web Complaint Form. These reporting mechanisms helped law enforcement and regulatory agencies identify fraudulent actors, investigate their schemes, and bring them to justice.

In conclusion, the U.S. Department of Justice plays a vital role in enforcing the law, ensuring justice, and protecting the rights of individuals and businesses. It provides a range of resources and information to the public, supports victims of crime, and collaborates with law enforcement agencies to investigate and prosecute fraud. The recent COVID-19 fraud scheme case in Nevada serves as a reminder of the department’s commitment to upholding the law and holding offenders accountable. Through programs like the Paycheck Protection Program, the DOJ aims to provide financial assistance and relief to those affected by the pandemic, while also taking robust measures to prevent and combat fraud.

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