Baltimore, Maryland – A federal grand jury has returned an indictment charging David Epstein, age 45, of Owings Mills, Maryland, for wire fraud and money laundering, relating to the submission of fraudulent COVID-19 CARES Act loan applications. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a federal law enacted in March 2020 to provide emergency financial assistance to Americans suffering from the economic effects caused by the COVID-19 pandemic. The indictment was filed on June 24, 2023, and unsealed today at Epstein’s initial appearance.
The indictment was announced by United States Attorney for the District of Maryland Erek L. Barron; Acting Special Agent in Charge Kareem A. Carter of the Internal Revenue Service - Criminal Investigation (“IRS-CI”), Washington, D.C. Field Office; and Special Agent in Charge Amaleka McCall-Brathwaite of the Small Business Administration (“SBA”) Office of Inspector General (“OIG”), Eastern Region.
Financial assistance offered through the CARES Act included forgivable loans to small businesses for job retention and certain other expenses, through the Paycheck Protection Program, administered through the Small Business Administration (SBA). The SBA also offered an Economic Injury Disaster Loan (EIDL) and/or an EIDL advance to help businesses meet their financial obligations.
According to the eight-count indictment, Epstein was the Chief Executive Office of PEI Staffing, LLC and served as the President of Stafquik, Inc. Epstein was the sole signatory on two accounts maintained by Stafquik at SunTrust Bank. The indictment alleges that from May 2020 to August 2020, Epstein executed a scheme to defraud the Small Business Administration and related financial institutions by fraudulently obtaining and attempting to obtain EIDL and PPP loan funds for his own personal use, including the purchase of a Mercedes-Benz automobile, renovations to his home, including installation of a pool, and for other unauthorized expenditures.
Specifically, on April 30, 2020, Epstein submitted a false and misleading PPP loan application in the name of PEI, seeking approximately $1,307,170 in PPP funds. The application allegedly contained false statements and omissions relating to PEI including the number of employees, the wages paid to employees, and that any funds received would be spend on expenses such as payroll, business rent and business utilities. For example, the application stated that PEI had 382 employees, when in fact, an IRS Form 941 for the second quarter of 2020 listed 79 employees for PEI. Epstein also falsely stated that he did not have common management with any other business. In fact, Epstein was a common manager of both PEI and Stafquik.
As detailed in the indictment, Epstein spoke with the representative of a financial technology company that served as the originating agent for the PPP lender regarding the status of PEI’s PPP loan application. During the call, Epstein stated that he planned to upload a February 2020 bank statement for the purported PEI bank account listed in the application. Epstein allegedly submitted a fictitious bank statement that falsely represented the bank account was in the name of PEI, when in fact, the account was one of the accounts in the name of Stafquik, to which Epstein was sole signatory.
In addition, on May 4, 2020, approximately $1,307,170 in PPP loan proceeds were disbursed to the SunTrust Stafquik account. Within four days, Epstein opened four personal bank accounts at two separate banks and subsequently transferred the PPP loan proceeds to those accounts to be used for personal and unauthorized expenses. For example, the indictment alleges that Epstein transferred $110,356.48 in PPP funds to Mercedes-Benz Financial Services in connection with his purchase of a 2019 Mercedes-Benz GT53C4.
The indictment further alleges that on November 18, 2020, Epstein submitted a false application for an EIDL in the name of Stafquik to the SBA, seeing approximately $150,000 in funds. In that application, Epstein proved the SBA a bank account number into which the EIDL proceeds were to be deposited, namely the second account at SunTrust held in Stafquik’s name with Epstein as the sole signatory. On November 19, 2020, SunTrust closed that account after being notified by the lender for the PEI PPP loan that the $1,307,170 in PPP funds disbursed to the other Stafquik account was an unauthorized transaction. Epstein called SunTrust seeking to reverse the closure of the account but was unsuccessful. Because the bank account was closed, the funds sought in the EIDL application for Stafquik were ultimately not disbursed.
If convicted, Epstein faces a maximum sentence of 20 years in federal prison for each of five counts of wire fraud and a maximum of 10 years in federal prison for each of three counts of money laundering. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
The District of Maryland Strike Force is one of three strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act was designed to provide emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.
For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus. Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
United States Attorney Erek L. Barron commended the IRS-CI and SBA-OIG for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorneys Paul A. Riley and Sean R. Delaney, who are prosecuting the case. Mr. Barron also recognized the assistance of the Maryland COVID-19 Strike Force Paralegal Specialist Joanna B.N. Huber.
For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao/md.
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