Tampa Man Sentenced To Over Three Years In Prison For Fraudulently Using Federal GSA Smartpay Account Numbers
Jacksonville, Florida – United States Attorney Maria Chapa Lopez announces the unsealing of an indictment charging Katrina Brown (37, Jacksonville) and Reginald Brown (56, Jacksonville) with one count of conspiracy to commit mail and wire fraud, twenty-six counts of aiding and abetting mail and wire fraud, and six counts of aiding and abetting money laundering. Each faces up to 20 years in federal prison for the conspiracy count and for each count of aiding and abetting mail and wire fraud; they face up to 10 years in federal prison for each count of aiding and abetting money laundering. The indictment also charges Katrina Brown with two counts of attempted bank fraud and two counts of making false statements to a federally insured financial institution; each count carries a maximum penalty of 30 years in federal prison. The indictment also charges Reginald Brown with failure to file a tax return; the maximum penalty for this charge is one-year imprisonment.
The indictment notifies both defendants that the United States intends to seek forfeiture of at least $754,613.10, which is alleged to be traceable to the offenses.
According to the, in late 2013, Katrina Brown began to operate as the primary principal for two businesses (Basic Products, LLC and CoWealth, LLC) that had obtained a loan from the Small Business Administration (SBA) in 2011 for $2.652 million, as well as a loan of $380,000 and grant of approximately $260,000 from the City of Jacksonville (COJ), to fund a business that specialized in manufacturing, bottling, and selling barbecue sauce.
Katrina Brown’s family had been in the barbecue business in Jacksonville for many years. The loan/grant money was supposed to fund an expansion of Basic Products and help to create permanent manufacturing jobs in Northwest Jacksonville. Each time Katrina Brown sought money for Basic Products from SBA-approved lender BizCapital, she prepared a Loan Reimbursement Form that included the purported business expenses for which Basic Products sought reimbursement.
In late 2013, when the barbecue business was not meeting financial projections, Katrina Brown approached Reginald Brown about incorporating two businesses, A Plus Training and Consultants, LLC and RB Packaging, LLC, with the Florida Division of Corporations. Katrina Brown worked together with Reginald Brown to submit fake invoices from A Plus Training and RB Packaging to BizCapital claiming that the businesses performed work for Basic Products requiring reimbursement, when the businesses had not.
When BizCapital sent the reimbursement checks for A Plus Training and RB Packaging to Reginald Brown’s home, or his mother’s home, Reginald Brown deposited them into the bank accounts for the businesses. He then withdrew a significant portion of the funds and provided them back to Katrina Brown who, either kept them or deposited the funds back into the Basic Products bank account that she controlled.
During this process, from late 2013 to early 2015, Reginald Brown and RB Packaging served as a conduit to receive $251,919.04 in SBA loan proceeds from BizCapital, and then funneled at least $166,500.00 back to Basic Products. Reginald Brown kept the difference in the RB Packaging account and used the majority of the money for personal expenses.
Reginald Brown never filed a tax return for tax year 2014, and he failed to disclose to the IRS that he had received tens of thousands of dollars from the SBA.
In December 2014, BizCapital sent all of the loan draw information to the City of Jacksonville, which included the numerous fraudulent A Plus Training and RB Packaging invoices. This information induced the City of Jacksonville to send $210,549.99 in grant money to BizCapital for the intended use of Basic Products. Katrina Brown and Reginald Brown failed to inform BizCapital that Basic Products fraudulently obtained at least $251,919.04 in loan payments made to Reginald Brown’s shell companies (A Plus Training and RB Packaging).
After BizCapital informed Katrina Brown that the SBA loan was in default status in January 2015, she attempted to obtain two bank loans by submitting doctored and false bank statements to loan brokers seeking loans to infuse cash into her and her family’s businesses. She falsified the statements in an attempt to make it appear that the businesses were creditworthy, when in fact they were not.
An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation. It will be prosecuted by Assistant United States Attorneys Tysen Duva and Michael Coolican.