Ringleaders of National COVID-19 Fraud Scheme Sentenced to 204 Months in Federal Prison

RALEIGH, N.C. – A federal judge sentenced Edward Sheldon Whitaker to 120 months in prison and, his wife, Schunda Coleman, to 84 months in prison for their roles in organizing a nationwide COVID-19 fraud scheme. The Court ordered both defendants to pay more than $10 million in restitution after they pleaded guilty to conspiracy to commit money laundering for their role in facilitating dozens of North Carolina residents to obtain fraudulent Paycheck Protection Act (“PPP”) COVID-19 loans. Additionally, the Court ordered forfeiture money judgments against Whitaker and Coleman in the amount of $3,872,548.24, as well as the forfeiture of the marital residence in Edinburg, Texas, and other accounts and property.

“Defrauding our nation during an emergency is disgraceful. Today’s sentences send a loud and clear message,” said U.S. Attorney Ellis Boyle. “While hardworking Americans pulled together during the pandemic, these defendants chose to line their own pockets. This office will continue delivering tough, no-nonsense justice to anyone who steals from taxpayers – we will not let fraudsters get rich off the backs of honest citizens.”

“The defendants created a scheme with the sole intent of enriching themselves during a national crisis,” said Special Agent-In-Charge Donald “Trey” Eakins, Charlotte Field Office, IRS Criminal Investigation. “They orchestrated a recruitment program to generate millions of dollars in fraudulent Paycheck Protection Program loans meant for those in need during the COVID-19 Pandemic. IRS-CI will continue its collaborative investigative efforts alongside our law enforcement partners to find those stealing from the federal government and subsequently the taxpayers.”

Whitaker and Coleman, a married couple from Edinburg, Texas, ran a scheme to abet individuals submitting fraudulent PPP loan applications nationwide.  According to the court documents, the pair created fake supporting documents and false company payroll records, which they provided to co-conspirator applicants for a fee. They also coached “clients” on how to falsify the number of employees and gross wages of a phony business to make it appear eligible for a PPP loan. Whitaker instructed individuals how to make it appear as though PPP loan proceeds were being paid out as wages, when in reality, the defendants transferred the money back to themselves.  

Whitaker and Coleman facilitated more than $15 million in fake PPP and Economic Injury Disaster Loan Program (EIDL) disbursements nationwide.  To further promote the scheme, they paid middlemen to recruit additional co-conspirators willing to file fraudulent loan applications.

To date, more than thirty defendants who conspired with Whitaker and Coleman have received federal prison sentences.

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, designed to provide emergency financial assistance to millions of Americans who suffered negative 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 PPP. Financial institutions issued the PPP loans, which were guaranteed by the Small Business Administration (SBA).

Assistant U.S. Attorney David G. Beraka prosecuted the cases. The Internal Revenue Service (IRS) Criminal Investigation investigated the cases.

A copy of this press release is located on our website. 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. 5:22-cr-00257-D.