COLUMBUS, Ohio -- James P. Dawson, 40, of Orlando, Florida pleaded guilty to wire fraud and making a false statement within the jurisdiction of an agency of the United States related to five coronavirus relief Paycheck Protection Program (PPP) Loans and four Economic Injury Disaster Loans (EIDL).
According to court documents, beginning in April 2020 and continuing until October 2020, Dawson, while living in central Ohio, submitted five fraudulent applications to obtain PPP loans, two of which were approved and funded. He also submitted four fraudulent applications to obtain EIDLs. None of the EIDLs were funded, but he received three EIDL Advances. Dawson’s applications collectively sought over $1.1 million in fraudulent loans and the lenders disbursed over $200,000 as a result of his fraudulent loan applications.
The fraudulent PPP applications made several materially false representations regarding the operations of the businesses, including monthly payroll expenses and number of employees. The PPP applications also falsely represented that the businesses were in operation on February 15, 2020.
For example, Stadium Bar LLC was a business that ultimately opened as a sports bar. Despite Dawson's certification that the business was in operation on February 15, 2020, the certificate of occupancy for the bar's location was not signed until March 20, 2020, the bar did not have a liquor license until May 26, 2020, and Dawson admitted in a law enforcement interview that it did not open until June 20, 2020.
Created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the Paycheck Protection Program authorized qualifying small businesses to receive forgivable loans to help pay payroll costs, rent utilities, interest on mortgages, and other permissible expenses. The size of the PPP loan a particular business could receive was based in part on its average monthly payroll costs. PPP loans were entirely forgivable if the funds were used for specified expenses.
In order to obtain a PPP loan, a business was required to submit a loan application to an approved lender. The loan application was required to be signed by an authorized representative of the business and to contain certain information, such as average monthly payroll expenses and number of employees. Applicants were also required to provide supporting documentation, such as federal tax returns and other financial documentation. Any PPP loans that were funded by lenders were fully guaranteed by the U.S. Small Business Administration.
The CARES Act also expanded the EIDL Program, which authorized qualifying small businesses to receive loans to help pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred. The SBA also offered an EIDL Advance that was designed to provide emergency economic relief to businesses that were experiencing a temporary loss of revenue. The EIDL Advance was considered a grant and was not required to be repaid. The maximum advance amount was $10,000.
Wire fraud carries a maximum penalty of 20 years in prison and a fine not to exceed $250,000. Making a false statement within the jurisdiction of an agency of the United States carries a maximum penalty of 5 years of imprisonment and a fine not to exceed $250,000. Dawson will be sentenced on a date to be determined after the court completes a pre-sentence investigation.
Kenneth L. Parker, United States Attorney for the Southern District of Ohio, Bryant Jackson, Special Agent in Charge, Internal Revenue Service Criminal Investigation, and Brady Ipock, Acting Special Agent in Charge, Central Regional Office, U.S. Small Business Administration Office of Inspector General (SBA-OIG) announced the plea entered today before U.S. District Judge Sarah D. Morrison. Assistant United States Attorney Peter K. Glenn-Applegate is representing the United States.
