Detroit Resident Pleads Guilty In COVID-19 Fraud Scheme
For Immediate Release
U.S. Attorney's Office, Eastern District of Michigan
Detroit resident Darrell Baker pleaded guilty today to bank fraud and money laundering arising out of a $590,000 Covid-19 fraud scheme, announced United States Attorney Matthew Schneider.
Joining in the announcement were Special Agent in Charge Steven M. D’Antuono, Federal Bureau of Investigation and Inspector General Hannibal Mike Ware of the Small Business Administration’s Office of Inspector General.
Darrell Baker, 56, pleaded guilty to one count of bank fraud arising from his effort to obtain some $590,000 by defrauding a Pennsylvania financial institution in the issuance of a Payroll Protection Program Loan. Baker also pleaded guilty to one count of money laundering, the result of financial transactions he engaged in with the fraudulently obtained funds.
United States Attorney Schneider stated, “My office and our law enforcement partners have no tolerance for frauds affecting programs designed to help our economy survive the Covid-19 pandemic. We will prosecute such cases aggressively, and today’s guilty plea is an example of our commitment to holding accountable anyone fraudulently obtaining pandemic relief funds to line their own pockets.”
“Mr. Baker's scheme exploited a fund designed specifically to support Americans during this financially challenging time,” said Steven M. D’Antuono, Special Agent in Charge of the FBI in Michigan. “Thanks to the hard work of the FBI and all of the agencies involved in this investigation, monies set aside for hard working Americans who are not able to work during this pandemic is secure and available for the people that need it most, not for the fraudsters like Mr. Baker."
According to the plea agreement, Baker applied for and obtained a $590,000 Payroll Protection Program Loan on behalf of a purported business that he owns, called “Motorcity Solar Energy, Inc.” The Payroll Protection Program is a program managed by the Small Business Administration (SBA) that provides loans to help businesses keep their workforces employed during the Covid-19 crisis. The SBA will forgive the loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The Payroll Protection Act loans are funded from participating banks, in this case Customers Bank in Pennsylvania.
According to the plea documents, Baker submitted paperwork with his loan application representing that Motorcity Solar Energy Inc. had 68 employees and, in 2019 paid wages, tips, and other compensation totaling $2.8 million. All of these representations were in fact false. Motor City Solar Energy had no employees, no payroll expenses of any kind, and was not an operational business. Baker submitted these false statements as part of a scheme to intentionally defraud Customers Bank and the Payroll Protection Program.
The plea documents state that Baker managed to withdraw approximately $172,000 of the $590,000 loan he obtained before Baker’s own financial institution froze the remainder, which was ultimately returned to Customer’s Bank. Baker used the funds he did obtain to purchase four cashier’s checks, and used the four checks to purchase two Cadillac Escalades, a Dodge Charger, and a Hummer. The plea agreement requires Baker to forfeit these vehicles. As part of the plea agreement, Baker also agreed to the entry of a money judgment against him in the amount of $172,484.40, which represents the portion of the loan that Baker obtained before his fraud was uncovered and the balance of the loan frozen.
Sentencing is set for January 14, 2021, before United States District Judge Laurie J. Michaelson,
The case is being prosecuted by Assistant United States Attorney John K. Neal. The investigation is being conducted jointly by the FBI and the SBA-OIG. .
Updated September 11, 2020