A federal jury in Atlanta has convicted two Georgians of defrauding more than $11 million in the government’s COVID-19 small business loan program.
Teldrin Foster, 42, of Decatur, pleaded guilty to multiple charges of bank fraud, wire fraud, conspiracy, making false statements and money laundering. He submitted fraudulent applications for twenty-four businesses to receive Paycheck Protection Program (PPP) loans, worth approximately $800,000.
Carla Jackson, 55, of Tucker, was convicted of two counts of money laundering for her role in processing ill-gotten funds.
The PPPP loan was intended to help small businesses retain employees and cover basic expenses during pandemic closures. Applicants had to explain their company’s payroll and use of money.
Foster and his associates forged documents claiming that each business had 60 employees and a monthly salary of $30 thousand, but this was not true. Fraudulent IRS tax forms were also included as evidence in the applications.
In order to hide where the money originally came from and how it was spent, the money was put into various accounts, including Carla Jackson’s.
Foster’s group obtained a total of more than $11 million from 24 separate PPP loans obtained under false pretenses. He faces up to 30 years in prison for bank fraud and 20 years in prison for wire fraud and money theft.
Cracking Down on COVID Loan Fraud
Companies affected by COVID-19 got $800 billion from the Paycheck Protection Program. Because money flowed through the new program so quickly, fraud was widespread despite warnings.
The schemes ranged from identity theft and shell companies to complex organized crime gangs. Billions have been stolen, but now the criminals are being arrested.
In May 2021, the Justice Department prioritized PPP fraud cases and formed a task force. Enforcement efforts have so far recovered $8 billion, with charges filed against more than 1,800 people.
US Attorney Ryan K. Buchanan said Foster’s case marks the largest COVID relief fraud scheme ever prosecuted in Georgia. Prosecutors reported that it was an “extensive and detailed” operation.
In addition to the jail sentence, the guilty pair will have to repay all the money stolen as well as further fines and penalties. The investigators will also trace the money trail to seize possible assets.
Relief Programs Still Available
COVID aid programs have helped countless regular small businesses, and surveillance is slowly improving, despite the problems.
The Small Business Administration changed verification procedures after initial PPP problems. The $1.9 trillion US rescue plan enacted in March 2021 also included an additional $7.25 billion for the most affected companies.
People can currently apply for the COVID-19 Economic Injury Disaster Loan Program, which provides long-term, low-interest loans to cover lost revenue.
Small business advocates say companies hit hard by the pandemic still need more support from Congress. However, tackling fraud hard from the start will be of paramount importance in any new funding.