Stephen Smith, Bank Fraud, Wisconsin 2021

Wisconsin Man Pleads Guilty to COVID-Relief Fraud

A 42-year-old Milwaukee man has admitted to perpetrating a massive COVID-relief fraud scheme, netting over $600,000 in Paycheck Protection Program (PPP) loans, guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

According to court documents, Stephen Smith, of Milwaukee, Wisconsin, pleaded guilty to bank fraud on April 12, 2021, after he fraudulently sought over $600,000 in PPP loans through applications to an insured financial institution on behalf of three different companies.

Smith caused fraudulent loan applications to be submitted that made numerous false and misleading statements about the companies' respective payroll expenses. He then directed his co-conspirators to send him portions of the PPP funds within days of receiving them and used the proceeds for personal expenses.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

Smith is scheduled to be sentenced on Wednesday, July 14, 2021, and faces a maximum penalty of 30 years in prison. United States District Judge Brett Ludwig will determine Smith's sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The SBA-OIG, FBI, FDIC-OIG, and IRS-CI are investigating the case. Trial Attorneys Laura Connelly and Leslie S. Garthwaite of the Criminal Division's Fraud Section and Assistant U.S. Attorney Stephen Ingraham of the Eastern District of Wisconsin are prosecuting the case.

Source: https://www.justice.gov/usao-edwi/pr/wisconsin-man-pleads-guilty-covid-relief-fraud