Defendants Sentenced to Prison for Pandemic Loan Fraud Scheme

MACON, Ga. – Two defendants were sentenced to serve more than five years in prison each and pay more than two million in restitution for their roles in a wire fraud conspiracy and money laundering scheme to fraudulently obtain COVID-19 relief funds, using the money on luxury cars and other personal items.

James Frank Austin, 51, of Americus, Georgia, was sentenced to serve 63 months in prison to be followed by five years of supervised release and pay $2,185,175.72 restitution to the Small Business Administration (SBA), $1,106,499.62 of which is owed jointly and severally with codefendant Way. Austin pleaded guilty to one count of conspiracy to commit wire fraud, two counts of bank fraud and two counts of money laundering on Aug. 27.

Rosalend Way, 40, of Milledgeville, was sentenced to serve 63 months in prison to be followed by three years of supervised release and pay $1,106,499.62 restitution to the SBA jointly and severally with codefendant Austin. Way was found guilty of one count of conspiracy to commit wire fraud and one count of money laundering on Sept. 24, following a three-day trial that began on Sept. 22.

U.S. District Judge Marc Treadwell handed down the sentences on Dec. 2. There is no parole in the federal system.

“Using stolen taxpayer dollars to purchase a Bentley and other luxury goods at a time of national emergency is wrong, pure and simple, and won’t be tolerated in the Middle District of Georgia,” said U.S. Attorney William R. “Will” Keyes. “Our office and our law enforcement partners will hold fraudsters accountable for profiting at the expense of honest and hard-working citizens.”

“Frank Austin and Rosalend Way are two of many people who took advantage of COVID-19 Economic Relief programs intended to provide critical assistance to millions of Americans during one of the deadliest pandemics in history,” said Special Agent in Charge Demetrius Hardeman, IRS Criminal Investigation, Atlanta Field Office. “The sentences they received today send an important message that IRS Criminal Investigation special agents and our law enforcement partners will continue investigating and holding those who committed fraud on the COVID-19 programs accountable.”

“Austin and Way chose to commit fraud, further depleting funds designed to help people who struggled to survive during the pandemic,” said FBI Atlanta Special Agent in Charge Paul Brown.  “The FBI and our law enforcement partners will continue to pursue criminals who cheat federal health programs and profit at the expense of American taxpayers.”

According to court documents and evidence submitted at trial, on June 21, 2020, Austin and Way applied for a Paycheck Protection Program (PPP) loan on behalf of Propel Opportunity Fund, a business established to raise capital through investors and use the funds to conduct pre-development work in underserved neighborhoods, preparing them for future development. The PPP loan application indicated that Propel had 18 employeeswith an average monthly payroll of $420,558, and they needed the funds to make payroll, as well as to pay their mortgage interest and utilities. They also submitted a fraudulent W-3 that indicated Propel paid $4,999,789 in wages in 2019. Way claimed 100% ownership of Propel on the PPP loan application.

IRS records from Propel’s 2019 corporate tax return showed that the company did not pay any salaries or wages, nor did Propel’s bank statements reflect payroll as suggested in the PPP application. The loan was approved and Propel received $1,051,395. Approximately $500,000 ended up in bank account’s belonging to Way and was spent on personal items including dining, retail, gas, groceries and cash withdrawals. Additionally, Austin used approximately $30,000 in funds from another fraudulently obtained PPP loan to pay off Way’s Mercedez-Benz.

Austin submitted a fraudulent PPP loan application on May 9, 2020, on behalf of the Austin Smith Center for Community Development (ASCCD). As a result of this fraudulent application, ASCCD was awarded a $654,315.00 PPP loan. Austin also obtained another fraudulent PPP loan for Propel and received $372,500 on March 15, 2021. Instead of these funds being spent for authorized expenditures under the PPP program, Austin used the money for personal expenses, including $119,840 on a Bentley. Austin obtained a total of $2,078,210 in fraudulent PPP loans.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The FBI and the IRS investigated the case.

Assistant U.S. Attorneys Elizabeth Howard and Hannah Couch prosecuted the case for the Government.