Couple who Fraudulently Obtained Almost $743,000 in Paycheck Protection Program Loan Scheme Pleads Guilty in Federal Court
A Tulsa couple who fraudulently applied for approximately $2.7 million in Paycheck Protection Program Loans pleaded guilty this week in federal court, announced U.S. Attorney Clint Johnson. Paycheck Protection Program (PPP) loans are guaranteed by the Small Business Administration (SBA) under the CARES Act.TULSA, Okla. – A Tulsa couple who fraudulently applied for approximately $2.7 million in Paycheck Protection Program Loans pleaded guilty this week in federal court, announced U.S. Attorney Clint Johnson. Paycheck Protection Program (PPP) loans are guaranteed by the Small Business Administration (SBA) under the CARES Act.
William Mark Sullivan, 49, and his wife, Michelle Cadman-Sullivan, 42, each pleaded guilty to Conspiracy to Commit Bank Fraud this week. The plea agreements call for the defendants to pay restitution in the amount of $114,281.58 to Arvest Bank and $628,645.00 to Exchange Bank, totaling $742,926.58, which represents the proceeds illegally obtained by the defendants as a result of the offenses. A federal judge will determine appropriate sentences and restitution amounts at the defendants’ sentencing hearings, which will be scheduled by the court.
“The Sullivans applied for and secured numerous Paycheck Protection Program loans fraudulently,” said U.S. Attorney Clint Johnson. “The $743,000 was intended to go to legitimate small business owners who were fighting to serve our community. My office and our federal law enforcement partners will hold accountable anyone who seeks to illegally enrich themselves by misdirecting federal emergency assistance.”
“SBA OIG continues to safeguard SBA programs from persons seeking to fraudulently take advantage through falsified information,” said SBA OIG’s Central Region Special Agent in Charge Sharon Johnson. “Our office relentlessly pursues fraudsters who seek to exploit SBA’s vital economic programs. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and commitment to seeing justice served.”
In their plea agreements, the Sullivans stated that between April 8, 2020 and May 11, 2020, they conspired together to submit false statements and reports to Arvest Bank and Exchange Bank when they applied for numerous Paycheck Protection Program loans, totaling approximately $2.7 million. The Sullivans submitted false information, false W2s, false Form 941s and false 2019 IRS Schedule Cs (Form 1040) in six Paycheck Protection Program (PPP) loan applications. They further stated that they had knowingly certified all the information in the applications and supporting documents were true and correct when they knew the information to be incorrect. The couple admitted to transferring the $742,926.50 in funds they received through various bank accounts and using the funds for personal expenses.
Mr. Sullivan stated in his plea agreement that he had represented on applications that “Oklahoma Paving” had an average monthly payroll of $50,546.41 on April 8, 2020, and “USA-1 Construction” had an average monthly payroll of $143,483.00 on April 30, 2020.
Similarly, Mrs. Sullivan stated that in their PPP loan applications, she falsely represented that “U.S. Central Construction” had an average monthly payroll of $26,053.00 on April 28, 2020; “Oklahoma Energy” had an average monthly payroll of $279,101.66 on May 4, 2020; “Oklahoma Paving” had an average monthly payroll of $279,101.66 on May 4, 2020; and “Oklahoma Energy” had an average monthly payroll of $251,458.00 on May 11, 2020.
The indictment alleged the couple had misrepresented the number of businesses they owned and operated, addresses and locations of the borrowing companies, time during which the borrowing companies had purportedly been in operation, number of employees, names and addresses of employees, monthly payroll amount, wage figures, payroll taxes, and representations about how the PPP funds would be allocated. The couple submitted multiple applications for the same borrowing companies to both of the banks, without disclosing that they were submitting duplicative and overlapping applications.
“These pleadings demonstrate that those who defraud the federal government of pandemic relief funds will be vigorously pursued and held accountable for their actions,” said Cory Nootnagel, Acting Special Agent in Charge, Western Region, Office of Inspector General for the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection.
The Small Business Administration Office of Inspector General, Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection Office of Inspector General; U.S. Department of Treasury Inspector General for Tax Administration; and FBI conducted the investigation. Assistant U.S. Attorneys Cymetra M. Williams and Matthew Feeley are prosecuting the case.
To learn more about the Justice Department’s COVID response, visit: https://www.justice.gov/coronavirus. For further information on the Criminal Division’s enforcement efforts on PPP fraud, including court documents from significant cases, visit the following website: https://www.justice.gov/criminal-fraud/ppp-fraud.
To report a COVID-19-related fraud scheme or suspicious activity, contact the National Center for Disaster Fraud (NCDF) by calling the NCDF Hotline at 1-866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-for