Baton Rouge Woman Sentenced to 48 Months in Federal Prison for Defrauding the PPP and EIDL Loan Programs and Laundering the Fraudulent Proceeds
United States Attorney Brandon J. Fremin announced that U.S. District Judge John W. deGravelles sentenced John Paul Funes, age 49, of Baton Rouge, to 33 months in federal prison following his conviction for wire fraud and money laundering. The Court further sentenced Funes to two years of supervised release following his term of imprisonment. As the Court noted at the sentencing hearing, the defendant has already forfeited $796,309, and the Court ordered the defendant to pay an additional $50,000 as a fine.
According to admissions made during his plea, Funes executed a scheme to defraud Our Lady of the Lake Foundation (the “Foundation”), a non-profit organization that supports the Our Lady of the Lake Regional Medical Center, and caused a loss of more than $550,000. During today’s sentencing hearing, the Court determined that the defendant’s fraudulent scheme caused a specific loss of $796,309. Funes prepared, signed, and submitted payment vouchers that caused the Foundation's accounting personnel to issue checks for the payees, amounts, and purposes reflected on the vouchers. Because of his position at the Foundation, Funes could approve his own vouchers, which enabled him to submit dozens of false and fraudulent vouchers that misrepresented the purpose of the checks. In furtherance of the scheme, for example, Funes submitted numerous fraudulent vouchers in which he represented that Foundation funds were necessary to pay a charter flight company to make time-sensitive “outbound patient transports” from Our Lady of the Lake Children’s Hospital, when in fact Funes was repeatedly using the flight company's services for his own personal benefit, unbeknownst to the Foundation. On numerous occasions, after fraudulently causing the Foundation to issue payments to other individuals, Funes would direct those individuals to funnel the majority of the funds back to him, by check or money order, thereby conducting financial transactions designed in part to conceal proceeds of the fraudulent scheme. In August of 2018, when the Foundation’s finance department began an internal audit of the expenses described above, Funes created numerous false documents in an effort to conceal the scheme.
U.S. Attorney Brandon J. Fremin stated, “This defendant blatantly violated the trust bestowed upon him by the Our Lady of the Lake Foundation and people they serve by stealing valuable resources from those who needed it most. This conviction and sentence should serve as a warning to those who would betray such trust. We are pleased that justice has prevailed, and I am grateful to the Foundation for the full cooperation and valuable assistance it has provided throughout this investigation. I am extremely proud of our prosecutor and the agents from the Secret Service, the FBI, and the IRS-Criminal Investigation Division for quickly getting to the bottom of this scheme and bringing the defendant to justice.”
Tara McLeese, Resident Agent in Charge of the United States Secret Service in Baton Rouge said “Today’s sentencing is the result of an outstanding collaborative effort between Federal Prosecutors and Federal investigative agencies based in the Baton Rouge area.”
Bryan A. Vorndran, FBI New Orleans Special Agent in Charge stated, “John Paul Funes betrayed Our Lady of the Lake Foundation, its donors, and the Baton Rouge community by embezzling funds that were intended to benefit the area's sick and injured children. The FBI New Orleans Field Office, along with the Internal Revenue Service – Criminal Investigation Division and U.S. Secret Service, will continue to vigorously investigate and hold those accountable who illegally profit at the expense of our community's institutions.”
“Funes abused his CEO position while engaging in a series of fraudulent transactions devised to siphon funds from a worthwhile public charity. IRS Criminal Investigation is proud to have assisted our partners in unraveling the criminal activity and fraudulent financial transactions undertaken by Funes for his personal benefit,” said Thomas J. Holloman III, Special Agent in Charge, IRS Criminal Investigation Atlanta Field Office. “Pooling the skills of each agency makes a formidable team as we investigate allegations of wrong-doing. Today's sentencing demonstrates our collective efforts to enforce the law and ensure public trust.”
This investigation is being handled by the United States Secret Service, along with the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. This matter is being prosecuted by Assistant United States Attorney Alan Stevens, who also serves as Deputy Criminal Chief.