Individual Admits to Perpetrating a $1.65M Fraud in the COVID-19 Loan Swindle
Small business owners seeking financial aid during the ongoing pandemic are advised to be vigilant and proactive in their approach to relief options. The Small Business Administration (SBA) and various federal agencies continue to monitor and investigate pandemic-related fraud, with the COVID-19 Fraud Enforcement Task Force established to combat such activities.
Recently, Shawn Nicholas Young, a 42-year-old individual, pleaded guilty to wire fraud involving over 100 fraudulent applications for pandemic relief funds. Young attempted to secure more than $9.5 million in loans intended for small businesses, using fake tax returns and backdated documents. He profited nearly $1.65 million from his actions, using the funds for personal expenses such as mortgage payments and a new car.
U.S. Attorney Nicholas J. Ganjei stated that Young's actions "undermined the very purpose of these relief programs designed to help small businesses in desperate need."
To avoid such legal issues, small business owners are encouraged to follow a few essential steps:
- Accurately assess eligibility: Understand specific program requirements, such as the Employee Retention Credit and EIDL advances, and ensure your business meets all criteria without misrepresenting facts.
- Submit complete and truthful applications: Provide honest financial information and documentation as required, avoiding exaggerations or omissions that could be construed as fraud.
- Keep thorough records: Maintain organized records of applications, funding received, and how funds are used, since government agencies may audit to verify proper use and compliance.
- Comply with loan terms and SBA guidance: If you received Economic Injury Disaster Loans (EIDL), understand repayment obligations and follow SBA directives, such as submitting subordination requests if obtaining additional loans, to avoid unintentional violations.
- Seek professional guidance if needed: Utilize local BusinessSource Centers or trusted accountants to support application accuracy and legal compliance.
- Avoid emotional or exaggerated pleading in communications: Use factual and template-based approaches for explanations rather than emotional appeals, which professionals warn can undermine credibility and compliance.
- Prioritize transparency and maintain accurate records: Small businesses must understand the current landscape of pandemic recovery and the increased oversight of loan applications.
Following these practices helps ensure your application aligns with legal requirements, minimizing the risk of fraud charges or other repercussions. Small business owners can report fraud through the Department of Justice's National Center for Disaster Fraud Hotline.
The SBA provides essential resources for small businesses related to pandemic fraud and recovery. Small businesses should prioritize transparency and maintain accurate records to safeguard against potential pitfalls in pandemic recovery. The potential benefits of securing funding for small businesses are significant, but the stakes of mismanagement have never been higher.
In light of the increased scrutiny on pandemic-related fraud, it's crucial for small-business owners to ensure their general-news articles and financial affairs are transparent and honest. To avoid crime-and-justice issues like the wire fraud case involving Shawn Nicholas Young, small-business owners must be proactive in accurately assessing their eligibility, submitting complete and truthful applications, keeping thorough records, complying with loan terms and SBA guidance, seeking professional guidance when needed, avoiding emotional pleading, and prioritizing transparency and record-keeping. This proactive approach aligns with the legal requirements, minimizing the risk of fraud charges or other repercussions.
