Repeat Fraudster Sentenced for COVID-19 Loan Fraud Scheme
NEWPORT NEWS, Va. – A previously convicted felon was sentenced today to 51 months in prison for engaging in a COVID-19 related loan fraud scheme with losses of nearly $200,000.
“During a global pandemic, the defendant took advantage of aid programs intended to provide critical relief for hardworking members of our communities impacted by the COVID-19 outbreak,” said Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia. “Our Office will continue to hold accountable individuals who exploit and disadvantage others in order to unlawfully enrich and advantage themselves.”
According to court documents, Joseph Cherry, 40, of Norfolk, engaged in a scheme to obtain COVID-related loan benefits through the Small Business Administration (SBA) and affiliated lenders. In addition to traditional SBA funding programs, the CARES Act, which was signed into law in March 2020, established several new temporary programs and provided for the expansion of others to address the COVID-19 outbreak. Such programs include the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL).
“Exploiting programs meant to help businesses in need during a global pandemic is appalling. Today, Cherry learned his actions have repercussions,” said Kelly R. Jackson, IRS-CI Special Agent in Charge. “We will continue to prioritize COVID-19 fraud investigations on those who essentially rob struggling businesses of the assistance they truly need.”
In March and April 2020, Cherry submitted multiple applications for PPP and EIDL loans. Cherry provided false information on the loan applications related to his claimed businesses, income, employment, and criminal record. As a result of these false applications, Cherry fraudulently obtained $196,900 in loan proceeds from the U.S. Treasury. In a brief period of time in April 2020, Cherry withdrew over $100,000 in the form of cash and a cashier’s check and made various purchases inconsistent with the purposes of the PPP and EIDL programs.
Cherry previously was convicted in the Eastern District of Virginia in 2009 for an extensive fraud, money laundering, and identity theft scheme involving losses of over $1.5 million. He has been convicted of over a dozen felony charges in federal and state courts since 2002, and he was under terms of supervision in both federal and state courts when he committed these additional fraud offenses in 2020.
Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia; Hannibal “Mike” Ware, Inspector General of the Small Business Administration; Brian Dugan, Special Agent in Charge of the FBI’s Norfolk Field Office; Kelly R. Jackson, Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation; and Peter R. Rendina, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service, made the announcement after sentencing by Senior U.S. District Judge Rebecca Beach Smith.
Assistant U.S. Attorney Brian J. Samuels prosecuted the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 4:20-cr-27.