Yakima, Washington – Vanessa R. Waldref, the United States Attorney for the Eastern District of Washington, has announced that Karla Padilla, age 48, of Yakima, Washington, was indicted this week on seven counts of fraudulently obtaining COVID-19 relief funding. This Indictment is the most recent set of charges resulting from the COVID-19 Relief Fraud Strike Force launched by the U.S. Attorney’s Office earlier this year.
On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act provided a number of programs through which eligible small businesses could request and obtain relief funding intended to mitigate the economic impacts of the pandemic for small and local businesses. One such program, the Paycheck Protection Program (PPP), provided government-backed loans to small businesses which could be forgiven so long as the proceeds were used for payroll and other eligible expenses. Another program, the Economic Injury Disaster Loan (EIDL) program, provided low interest loans that could be deferred until the conclusion of the pandemic to provide “bridge” funding for small businesses to maintain their operations during shutdowns and other economic circumstances caused by the pandemic. The PPP and EIDL programs have provided billions of dollars in aid, the vast majority of which have not been paid back, including hundreds of millions of dollars disbursed within Eastern Washington.
“COVID-19 relief programs were designed to lift up our community during crisis, and due to the number of people and businesses that requested funding, some deserving small businesses were not able to obtain funding to keep their businesses in operation,” said U.S. Attorney Waldref. “We created the COVID-19 Fraud Strike Force because combatting pandemic-related fraud and holding those accountable who abused these programs is critical to the strength and safety of our community in Eastern Washington. The Strike Force works to ensure that limited resources are used to protect our local small businesses and the critical jobs and services that they provide for the community.”
In February 2022, U.S. Attorney Waldref and the U.S. Attorney’s Office (USAO) began working with federal law enforcement agencies to create and launch a COVID-19 Fraud Strike Force that would leverage partnerships between different agencies to aggressively investigate and prosecute fraud against COVID-19 relief programs in Eastern Washington. The Strike Force consists of agency representatives from the USAO, Small Business Administration (SBA) Office of Inspector General (OIG), Federal Bureau of Investigation (FBI), U.S. Department of the Treasury Inspector General for Tax Administration (TIGTA), U.S. Secret Service, U.S. Homeland Security Investigations, U.S. Department of Veterans Affairs OIG, General Services Administration OIG, Internal Revenue Service, Department of Energy OIG, and others. Cases investigated and prosecuted by the Strike Force have resulted in numerous indictments, criminal prosecutions, and civil penalties.
The Indictment announced today charges seven counts of fraud arising from one EIDL and two PPP loans obtained by Padilla in 2020 and 2021 on behalf of her supposed collectible car business identified as Queen B Collectibles. The Indictment alleges that Queen B Collectibles was not a legitimate business, had no employees, receipts or business operations, and was not eligible for any EIDL or PPP funding, and that Padilla submitted false information in order to fraudulently obtain over $59,000 in EIDL and PPP funding. The Indictment also alleges that Padilla unsuccessfully and fraudulently attempted to obtain four additional EIDLs for Queen B Collectibles, which SBA did not fund.
“I commend the stellar investigative work on these cases performed by the Strike Force and especially in this case by SBA OIG and TIGTA,” said U.S. Attorney Waldref. “We will continue to work together with our law enforcement partners to vigorously prosecute those who abuse and misuse COVID-19 relief funding, and to strengthen our communities by protecting our small and local businesses.”
This case was investigated by the Eastern District of Washington COVID-19 Fraud Strike Force, with SBA OIG and TIGTA as the lead investigative agencies. This case is being prosecuted by Assistant United States Attorney Tyler H.L. Tornabene, Assistant United States Attorney Dan Fruchter, and Special Assistant United States Attorney Frieda K. Zimmerman.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.