COVID aid programs targets of fraud

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The billions of dollars in loans offered by the federal government to help small businesses weather the COVID-19 pandemic have attracted their share of scam artists looking to defraud taxpayers, court records show. 

For the second time since June, a Knoxville resident is facing the prospect of spending years in the federal penitentiary after cooking up a crooked scheme to obtain tens of thousands of dollars in loans.

James Waylon Howell, 39, has entered into a plea agreement with federal prosecutors that means he will spend up to 20 years in prison and pay $69,354.88 in restitution, according to the U.S. Attorney’s Office in Knoxville.

As part of his agreement, he waived a grand jury review and pleaded guilty Thursday to one count each of wire fraud and money laundering before U.S. District Judge R. Leon Jordan.  He is scheduled to be sentenced on January 13. 

Between April 1 to the end of June 2020, Howell made numerous false statements while applying for a series of loans totaling $154,700, prosecutors said. 

For example, “Howell submitted an online application to the Small Business Administration in the name of Advanced Strategy Holdings, LLC, seeking $83,800 in …. funds,” said a statement the U.S Attorney’s Office. 

“On the application and in the supporting documents, Howell falsely claimed that Advanced Strategy Holdings employed four individuals, generated $700,000 in gross revenue, incurred $0 in cost of goods sold, and paid wages of $440,000 in the 12 months preceding the Covid-19 pandemic,” the statement said. 

“These claims were all false. In further support of the application, Howell submitted fabricated Internal Revenue Service documents. After receiving the loan proceeds  from the Small Business Administration, Howell transferred the proceeds to his personal bank account, knowing that the loan proceeds were obtained fraudulently.”

A Knoxville woman pleaded guilty to a similar scheme in June. In that case, Porsha Tims Bush, 41, pleaded guilty to wire fraud for a scheme intended to yield her more than $547,000 in loans. 

Both defendants targeted a pair of federal programs meant to help small business owners and their employees weather the worst of the economic storm caused by the pandemic, including the $649 billion Paycheck Protection Program (PPP) and its forgivable loans that allowed small businesses to continue paying their employees, rent, utilities and other essential expenses. 

They also took aim at the Economic Injury Disaster Loan (EIDL) program, which gave low-interest loans to those affected by disasters.

Assistant U.S. Attorney William A. Roach, Jr. is prosecuting both cases, which were investigated by the FBI and the Internal Revenue Service’s Criminal Investigation division. 

Published on Sept. 13, 2021.