Federal authorities in California arrested two women on Thursday, accusing them of organizing a fraudulent loan scheme that exploited the government’s Paycheck Protection Program (PPP) during the COVID-19 pandemic.
The two women, Vanessa M. Williams, 35, of Corona, and Denise Mata, 34, of Moreno Valley, face multiple counts of wire fraud following a 23-count indictment returned by a federal grand jury. Mata has also been charged with an additional count of aggravated identity theft.
The women’s alleged accomplices, Daryl D. Knighten Jr., 32, and Mikhail G. Hoalim, 33, were also charged in the indictment with multiple counts of wire fraud. Police are still searching for both men.
The indictment alleges that the four defrauded the government out of approximately $3.5 million.
From March to August 2021, the four allegedly submitted false PPP loan applications to the U.S. Small Business Administration (SBA) on behalf of themselves, family members, friends, and recruited participants, prosecutors said.
Congress created PPP loans in 2020 to help businesses struggling with the economic impact of the pandemic; however, the lawsuit alleges that the four used deceitful claims and fake documents to exploit the program for personal financial gain.
The indictment details how the suspects allegedly provided false information on each loan application, fraudulently claiming self-employment status for over 100 individuals. In addition, for each application, they allegedly submitted fraudulent tax forms and misrepresented how the funds would be used.
Once the PPP loan was approved by the SBA, participants would pay kickbacks to the four suspects.
“The defendants and their co-schemers used the illicitly obtained money for their own personal benefit and not for expenses allowable under the PPP,” prosecutors said.
Once the money was spent, the four suspects submitted more fraudulent documents to the SBA and other lenders to obtain loan forgiveness.
In March 2021, Mata allegedly used another person’s Social Security numbers without that person’s permission in connection with the loan scam.
If convicted, the suspects will face severe penalties: up to 20 years in federal prison for each wire fraud charge, with Mata facing an additional mandatory two-year sentence if convicted of aggravated identity theft.
The case is another example of the Department of Justice’s ongoing efforts to combat widespread pandemic-related fraud through the COVID-19 Fraud Enforcement Task Force, established in 2021.
Just Tuesday, Orange County Supervisor Andrew Do pleaded guilty to felony federal corruption charges for taking at least $550,000 in bribes for funneling more than $10 million in COVID funds to a charity that employed one of his daughters.
The same day, owners of Del Mar Fairgrounds in San Diego agreed to pay a $5.7 million settlement over an unlawfully received PPP loan.