Baltimore Man Pleads Guilty to Wire Fraud for Submitting Fraudulent COVID-19 CARES Act Relief Loan Applications
Defendant Submitted Falsified Tax Documents to Support the COVID-19 CARES Act Loan Applications Using the Name and Preparer Tax ID Number of an Individual, Without that Person’s Knowledge or Permission
Baltimore, Maryland – Dana Lamar Antonio Hayes, Jr., age 37, of Baltimore, Maryland, pleaded guilty today to a federal wire fraud charge related to a scheme to obtain a fraudulent Economic Injury Disaster Relief loan application (EIDL loan) and several Paycheck Protection Plan loan applications (PPP loans), under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, from two financial institutions (Bank1 and Bank 2).
The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
According to his plea agreement, between March 2020 and October 2021, Hayes submitted a fraudulent EIDL loan application and PPP loan applications to the Small Business Administration (SBA) and two financial institutions (Bank1 and Bank 2).
Specifically, in March 2020, Hayes submitted a fraudulent EIDL loan application on behalf of his previously forfeited and recently revived company, D&L Investment Properties Inc. The EIDL loan application contained false statements regarding the number of D&L employees and the payroll expenses of D&L. In addition, the application asked: “For any criminal offense…have you ever been convicted plead guilty, plead nolo contendere, been placed on pretrial diversion, or been placed on any form of parole or probation (including probation before judgment)?” Hayes answered “No,” even though Hayes knew that, on April 30, 2019, Hayes was placed on probation for a firearm offense, specifically for possession of a stolen firearm. Hayes also claimed to have company expenses of $15,000 and equipment costs of $35,000, when in fact, the company had been inactive since 2019.
The SBA initially denied Hayes’ EIDL application, and for the next 18 months, Hayes regularly contacted the SBA to have his EIDL application approved. On the basis of false and fraudulent information, the SBA ultimately approved Hayes’s EIDL application and provided Hayes $15,000 in COVID-19 CARES Act loan funds on behalf of D&L. Once the funds were deposited into D&L’s bank account, Hayes transferred all of the loan proceeds from D&L’s bank account into his personal savings account.
As detailed in the plea agreement, in June 2020 and January 2021, Hayes applied for PPP loans with Bank 1 and Bank 2 on behalf of D&L. In these PPP loan applications, Hayes included false statements regarding the number of employees for his business, falsified tax forms, lied about his probation status, and provided false payroll expenses of D&L. On the basis of fraudulent information, Bank 1 and Bank 2 each approved a PPP loan for D&L, depositing a total of $35,036, in D&L’s bank account. Hayes quickly transferred the loan proceeds into his personal savings account.
In preparing the January 2021 PPP loan for Bank 2, Hayes admitted that he used the name and Preparer Tax Identification number of Victim 1 to submit a fraudulent tax form to Bank 2 without Victim 1’s knowledge or consent. Victim 1 had been previously hired by Hayes to prepare D&L and Hayes’ personal tax returns, however, Victim 1 claims that they have never prepared Form 941’s for D&L, and federal records indicate no such form was ever filed. Hayes admitted that he applied for a second fraudulent PPP loan to Bank 1 in January 2021, but that loan was not approved.
On November 4, 2021, Hayes applied on behalf of D&L to Bank 1 for PPP loan forgiveness for the first draw loan, falsely stating that D&L had spent the entire loan amount, $12,500, on payroll costs. Hayes’s forgiveness application was not approved.
In February 2022, while the alleged COVID-19 relief scheme was ongoing, Hayes applied to become the Chief of Fiscal Services for the Baltimore City Police Department. Hayes was subsequently hired for the position in April 2022 and terminated shortly thereafter.
“The defendant’s guilty plea should reflect our continued resolve to investigate and prosecute those who try to exploit a national emergency to steal taxpayer-funded resources by using the global pandemic as an opportunity to defraud the United States Government,” said Darrell J. Waldon, IRS Criminal Investigation Special Agent in Charge of the Washington D.C. Field Office. “IRS Special Agents are committed to working with our law enforcement partners to aggressively uncover and disrupt criminals who conspire to abuse these programs for personal gain.”
Hayes faces a maximum sentence of twenty years in federal prison for wire fraud. Actual sentences for federal crimes are typically less than the maximum penalties. U.S. District Judge George L. Russell, III has scheduled sentencing for Hayes on April 17, 2023, at 2:00 p.m.
On May 17, 2021, the 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.
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. 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.
United States Attorney Erek L. Barron commended the FBI and the IRS- CI for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorney Aaron S.J. Zelinsky, who is prosecuting the case.
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 and https://www.justice.gov/usao-md/community-outreach.
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