BOSTON – Donovan Scarlett, 25, of West Roxbury, admitted in federal court on May 15, 2024, to defrauding the Paycheck Protection Program (PPP) – a scheme that netted him $13,600 in pandemic relief funds he wasn’t entitled to. The guilty plea is a piece of a larger crackdown on the notorious Heath Street Gang and their associates, highlighting how criminal enterprises exploited the crisis for profit.
Scarlett pleaded guilty to one count of wire fraud before U.S. District Court Judge Denise J. Casper. Sentencing is scheduled for September 5, 2024. The feds caught up with Scarlett back in February 2024, as part of a massive sweep targeting over 40 alleged members and associates of the Heath Street Gang. They face charges ranging from racketeering and drug trafficking to firearms violations and, crucially, financial fraud – including this COVID-19 scheme.
Court documents reveal that in March 2021, Scarlett submitted a bogus PPP loan application for a business that existed only on paper. The application was riddled with lies, falsely inflating the company’s 2020 gross income and conveniently omitting Scarlett’s own criminal history. He even backed up the deception with falsified tax records. The Small Business Administration, fully guaranteeing the loan, approved it, and $13,600 landed in Scarlett’s hands – money quickly diverted to personal expenses.
The PPP, established under the CARES Act, was designed to be a lifeline for struggling small businesses during the pandemic. Loans were processed by private banks but backed by the SBA, with the promise of forgiveness if funds were used for legitimate purposes like payroll. Scarlett’s scheme, like countless others, chipped away at those funds, diverting resources from those who truly needed them. This wasn’t just theft; it was a betrayal of a system meant to help people survive.
Scarlett now faces up to 20 years in prison, three years of supervised release, and a fine of up to $250,000 – or twice the amount he illegally obtained. The sentence will ultimately be determined by Judge Casper, taking into account U.S. Sentencing Guidelines and relevant statutes. Acting United States Attorney Joshua S. Levy, Boston Police Commissioner Michael Cox, and federal investigators from the Department of Labor and IRS Criminal Investigations jointly announced the guilty plea.
This case is part of a broader Organized Crime Drug Enforcement Task Forces (OCDETF) operation, and falls under the COVID-19 Fraud Enforcement Task Force established by the Attorney General. Authorities are urging anyone with information about COVID-19 related fraud to report it to the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via their web complaint form: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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Key Facts
- State: Massachusetts
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes|Organized Crime
- Source: Official Source ↗
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