Kenneth W. Matthews, Disaster Loan Fraud, TX, 2023

BEAUMONT, Texas – Kenneth W. Matthews, the former owner of MegaBowl in Port Arthur, Texas, has been hit with a guilty verdict on charges of disaster loan fraud, according to U.S. Attorney John M. Bales.

The 58-year-old Fort Pierce, Florida resident stood before U.S. Magistrate Judge Zachary Hawthorn and admitted to conspiring with his general contractor and subcontractor from January 2008 to May 2010 to submit false invoices for repair work following Hurricanes Humberto and Ike. These deceitful acts were aimed at obtaining low-interest disaster repair loans from the Small Business Administration (SBA), totaling $750,000 after Hurricane Humberto and $760,000 after Hurricane Ike.

Matthews pocketed the loan proceeds but only paid back a fraction of the actual work done by the contractors. He also received kickbacks, which he failed to declare. The funds were meant exclusively for hurricane-related repairs and were forbidden from being used for general business or personal expenses.

In a deal with the SBA, Matthews has agreed to pay $500,000 in criminal restitution. However, his civil liabilities for the full amount of the loan proceeds remain unchanged. He faces up to five years in federal prison, with no sentencing date set yet.

This case was brought to light by the Small Business Administration-OIG and the Federal Bureau of Investigation, who were assisted by Assistant U.S. Attorney Robert L. Rawls. The investigation is part of a broader effort by the Hurricane Katrina Fraud Task Force, established in 2005 by the Department of Justice to combat fraud related to disaster relief efforts.

The task force includes members from various federal agencies such as the FBI, the Federal Trade Commission, and the U.S. Postal Inspection Service.