Federal Court Upholds 46-Month Sentence in COVID Fraud Case

Fraud-based crimes often carry more severe criminal penalties than people realize. Many crimes associated with fraud are subject not just to state but also federal prosecution. And the federal system takes fraud quite seriously, especially when the alleged victim is a bank or the government itself.

Atlanta Prosecutors Nab 11 for Filing False Loan Applications

For instance, here in Georgia we have seen a notable surge in federal prosecutions for fraud against the programs that were meant to help businesses deal with the government-imposed lockdowns early in the COVID-19 pandemic. Just recently, the U.S. 11th Circuit Court of Appeals in Atlanta upheld the conviction and nearly four-year prison sentence of a man convicted for his participation in a conspiracy to defraud the Paycheck Protection Program (PPP).

Congress enacted the PPP as part of a broad COVID-19 relief package in April 2020. Under the PPP, a qualified business could apply for low-interest loans from private banks to meet their payroll and other business expenses. Under certain conditions, the U.S. Small Business Administration would partially or completely forgive the loan, thus relieving the business of its obligation to repay the lender.

The case recently before the 11th Circuit, United States v. Crosby, involved one of 11 defendants charged by the U.S. Attorney’s Office in Georgia with conspiring to defraud banks of nearly $11 million in PPP loans. Most of the defendants were charged with bank fraud, an offense that carries a maximum possible sentence of 30 years under federal law.

The defendant in Crosby allegedly received a $300,000 PPP loan to cover payroll expenses for non-existent employees of his business. In sentencing the defendant following his conviction, however, the trial court held the defendant accountable for $600,000 loss based on evidence that he referred another person to a co-conspirator so they could also obtain a fraudulent PPP loan. On appeal, the 11th Circuit upheld the trial court’s decision on this issue, noting that it resulted in a substantial increase in the defendant’s offense level under the federal sentencing guidelines.

Altogether, the trial court sentenced the defendant to three years and 10 months in federal prison, to be followed by three years of supervised release (probation). The defendant must also pay the government $897,172.61 in restitution.

Contact Hawkins Spizman Trial Lawyers Today

Filing a false loan application may not seem as bad as robbing a bank at gunpoint. But when it comes to the criminal justice system, they are essentially no different. So if you have been charged with fraud or a similar offense you need to work with an experienced Georgia criminal defense attorney who can advise you of your rights. Contact Hawkins Spizman Trial Lawyers today to schedule a free consultation. We serve clients throughout Georgia including Atlanta, Dunwoody, Alpharetta, Cobb County, Fulton County, Gwinnett County, Johns Creek and Sandy Springs.

Sources:

wsbtv.com/news/georgia/11-men-sentenced-their-roles-3-million-paycheck-protection-program-fraud-scheme/TFLM5FJ6GBFVVMJAGZCVM2KFY4/

hscholar.google.com/scholar_case?case=9576247846500464885