Three Peoria men have been sentenced for their involvement in Paycheck Protection Program (PPP) fraud, a federal program designed to provide financial relief to small businesses affected by the COVID-19 pandemic. The men were found guilty of making false statements and fraudulently obtaining PPP funds, as well as unemployment benefits from multiple states. The program, implemented by the Small Business Administration, aimed to support struggling businesses by covering payroll costs, rent, utilities, and mortgage interest. The three men, Kendall A. Mack, Rasheem McCree, and Adrian Lamont Morris, were indicted in 2022 and have now been sentenced for their crimes. This article highlights the details of their fraudulent activities and the consequences they face for their actions.
The Paycheck Protection Program (PPP) was a federal initiative implemented in response to the economic fallout caused by the COVID-19 pandemic. The program aimed to provide financial assistance to small businesses facing hardships due to the pandemic. It offered funds to cover payroll costs, rent, utilities, and mortgage interest for a period of up to eight weeks. The PPP was implemented by the Small Business Administration (SBA) and administered by third-party lenders.
In October 2022, three individuals from Peoria, Illinois, were indicted for their involvement in fraudulent activities related to the PPP. These individuals were accused of making false statements and fraudulent claims to obtain PPP loans. Their actions not only violated the integrity of the program but also resulted in financial losses to the SBA and other entities.
Kendall A. Mack’s guilty plea and sentence
One of the individuals involved in the PPP fraud, Kendall A. Mack, pleaded guilty in May 2023 to one count of making a false statement in April 2021 to obtain a PPP loan. Between April and September 2021, Mack fraudulently obtained PPP funds by submitting a fraudulent PPP application and loan forgiveness application. The losses to the SBA and Capital Plus Financial, LLC, were estimated to be $39,239.08.
In sentencing Mack, U.S. District Judge James E. Shadid imposed a sentence of three years’ probation and imprisonment for the time already served. Additionally, Mack was ordered to pay restitution in the amount of $39,239.08.
Rasheem McCree’s guilty plea and sentence
Another individual involved in the PPP fraud, Rasheem McCree, pleaded guilty in April 2023 to one count of making a false statement in March 2021. McCree submitted a false application for PPP funds and also admitted to fraudulently obtaining unemployment benefits from five different states. The losses incurred by the SBA and the states amounted to $89,981.34.
U.S. District Judge James E. Shadid sentenced McCree to 27 months’ imprisonment, followed by three years of supervised release. McCree was also ordered to pay $89,981.34 in restitution.
Adrian Lamont Morris’s guilty plea and sentence
Adrian Lamont Morris, the third individual involved in the PPP fraud, pleaded guilty in April 2023 to one count of making a false statement in March 2021. Similar to the other defendants, Morris submitted a false application for PPP funds and also filed for unemployment benefits from several states. The estimated loss to the SBA and those states was $60,642.
U.S. District Judge James E. Shadid sentenced Morris to 24 months’ imprisonment, followed by three years of supervised release. Morris was also ordered to pay $60,642 in restitution.
Defendants’ claims of being sole proprietors of barber shops
During the investigation into the PPP fraud, it was discovered that each of the defendants claimed to be the sole proprietors of barber shops on their loan applications. However, further scrutiny revealed that none of them had registered barber shops, employees, a payroll, or any legitimate business-related expenses. Additionally, it was determined that none of the defendants were licensed barbers, further undermining their claims.
Lack of registered barber shops and employees
One of the key indicators of fraudulent activity in the PPP applications was the absence of registered barber shops and employees. A thorough examination revealed that the defendants had fabricated the existence of the barber shops in order to qualify for the PPP funds. This dishonest representation contributed to their successful acquisition of the loans.
Defendants’ criminal histories
Judge Shadid noted the significant criminal histories of two of the defendants, Rasheem McCree and Adrian Lamont Morris. This factor was taken into consideration during their sentencing. The defendants’ previous involvement in criminal activities further demonstrated their disregard for the law and strengthened the case against them.
As part of their sentences, all three defendants were ordered to pay restitution for the losses incurred as a result of their fraudulent activities. Kendall A. Mack was ordered to pay $39,239.08, Rasheem McCree was ordered to pay $89,981.34, and Adrian Lamont Morris was ordered to pay $60,642. These restitution orders aim to ensure that the victims are compensated for their financial losses caused by the defendants’ actions.
Investigation and Prosecution
The PPP fraud case involving the three Peoria men was investigated by the Internal Revenue Service, Criminal Investigation, and the Federal Bureau of Investigation, Springfield Field Office. The collaboration between these two agencies played a crucial role in uncovering the fraudulent activities and gathering evidence for the case.
The government was represented in the prosecution by Criminal Chief Darilynn J. Knauss. Knauss’s expertise and dedication to justice were instrumental in building a strong case against the defendants and seeking appropriate penalties for their actions.
False statements made in relation to the PPP fall under the purview of 18 U.S.C. §1001(a)(3). The statutory penalties for such false statements can include imprisonment of up to five years, a potential fine of $250,000, and a term of supervised release of up to three years. These penalties serve as a deterrent to individuals considering fraudulent activities and emphasize the seriousness of the offense.
The conviction of Pere Marquette Developers for mail fraud, money laundering, and bankruptcy charges is an example of another case involving financial fraud. In this case, developers Gary E. Matthews and others were found guilty of fraudulent activities related to the Pere Marquette Hotel. This conviction demonstrates the commitment of law enforcement to combating financial fraud and holding individuals accountable for their actions.
In addition, there have been other cases involving individuals from Peoria and Springfield who were sentenced for their involvement in Paycheck Protection Program fraud and wire fraud. These cases further highlight the prevalence of fraudulent activities and the efforts made by law enforcement agencies to prosecute those responsible.
In conclusion, the sentencing of the three Peoria men for their involvement in Paycheck Protection Program fraud is a significant step towards upholding the integrity of government programs and deterring fraudulent activities. The investigation and prosecution of these cases demonstrate the commitment of law enforcement agencies to uncovering financial fraud and seeking justice for the victims. The statutory penalties and restitution orders imposed on the defendants serve as a reminder that fraudulent actions will not go unpunished.