Convicted Felon Federally Charged with Fraudulently Obtaining More Than $800,000 in COVID Funds by Hiding Criminal History

LOS ANGELES – A San Bernardino County man was arrested today on a federal criminal complaint alleging that he fraudulently obtained more than $800,000 in taxpayer funded COVID-19 relief funds by concealing his recent federal mail fraud conviction.

Justin Konikow, 38, of Ontario, is charged with wire fraud. He is expected to make his initial appearance this afternoon in U.S. District Court in downtown Los Angeles. 

According to an affidavit filed with the complaint, in April 2020 Konikow applied for an Economic Injury Disaster Loan (EIDL), a program which provided low-interest funding to small businesses affected by the COVID-19 pandemic. The application was submitted on behalf of an entity called “Trendsetters” and listed Konikow as its sole owner.

The April 2020 application contained representations that neither Konikow nor the business had ever been criminally charged or convicted of a crime. In fact, Konikow had been convicted in January 2020 of mail fraud in Los Angeles federal court for scheming to defraud the United States, the State of California and its Employment Development Department out of more than $250,000 by filing false unemployment and disability insurance claims using synthetic identities and fake companies. Konikow was sentenced in January 2021 to 35 months’ imprisonment and began serving his sentence in February 2022. 

The affidavit alleges that between 2021 and 2022, three EIDL modifications to increase the total proceeds were submitted, each identifying Konikow as Trendsetter’s sole owner. Each application contained a certification that all representations in the loan application (including in the original application) were true, correct, and complete, under penalty of perjury. None of the modification applications provided any information that Konikow was a convicted criminal.

The Small Business Administration (SBA) approved the EIDL and each modification application and wired the loan proceeds totaling approximately $805,000 into Konikow’s bank account. Konikow then quickly wired substantial amounts of the COVID funds out of his bank account to pay off his credit card debt, car payments, and a transfer of approximately $47,000 to his Robinhood stock trading account.

A criminal complaint contains allegations. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

If convicted, Konikow would face a statutory maximum sentence of 20 years in federal prison.

The SBA Office of Inspector General is investigating this matter.

Assistant United States Attorney Gregg Marmaro of the Major Frauds Section is prosecuting this case.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.