Texas Couple Pleads Guilty to Orchestrating an Extensive Multi-Million COVID-19 Fraud Scheme in North Carolina
“The defendant took money meant to help small businesses struggling during the pandemic,” said U.S. Attorney Michael Easley. “We will vigorously pursue criminals who lined their pockets with taxpayer money while the pandemic crippled local businesses.”
“The Paycheck Protection Program (PPP) was the key to survival for many small businesses during the COVID-19 pandemic,” said Special Agent in Charge Donald “Trey” Eakins of IRS Criminal Investigation, Charlotte Field Office. “PPP funds should be reserved for legitimate businesses and their hard-working employees who suffered as a result of the pandemic. IRS Criminal Investigation along with our law enforcement partners are committed to pursue those who commit such fraud.”
In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was designed to provide emergency financial assistance to millions of Americans who were suffering the economic effects caused by the COVID-19 pandemic. The CARES Act and additional appropriations authorized up to $649 billion in forgivable loans to small businesses through the Paycheck Protection Program (PPP). Financial institutions issued the PPP loans, which were guaranteed by the Small Business Administration (SBA).
Jackson conspired with others to obtain fraudulent PPP loans in the names of several companies under Jackson’s control. After receiving the proceeds of the fraudulent PPP loans, Jackson carried out a series of steps detailed by his co-conspirators to make it appear as though the borrower’s company was paying bi-weekly payroll to its employees. Over a series of six to eight weeks, Jackson wrote checks payable to each of the individuals previously named as employees in the PPP loan applications. These actions made it appear as though Jackson’s companies were paying regular wages as intended by the CARES Act. In most instances, the recipients of the checks were either not employees of the borrower company at all, or they were not actually earning wages comparable to what was represented in the loan applications. Jackson instructed his purported employees to cash the checks, and then return the illicit cash to him.
In addition to directly engaging in the PPP fraud described above, Jackson also served as a middleman, earning a fee from his co-conspirators for each additional fraudulent borrower he recruited. He ultimately recruited over a dozen individuals who obtained fraudulent PPP loans. Those Jackson recruited engaged in the same scheme described above to launder the proceeds of the fraudulent loans. Nearly $4 million of fraudulent PPP disbursements are attributable to Jackson or to individuals he recruited to the scheme.
Jackson pleaded guilty to Conspiracy to Commit Money Laundering in violation of 18 U.S.C. § 1956(h). Sentencing before United States District Judge James C. Dever III is scheduled to occur next year.
Michael Easley, U.S. Attorney for the Eastern District of North Carolina made the announcement after
The Eastern District of North Carolina’s COVID Task Force is a part of an effort to coordinate COVID-related fraud investigations and prosecutions in Eastern North Carolina. On May 17, 2021, the United States Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No.