Three Sentenced for Paycheck Protection Program Loan Fraud Schemes in the Northern District of Oklahoma
For Immediate Release
U.S. Attorney's Office, Northern District of Oklahoma
Three Tulsa-area residents who fraudulently applied for Paycheck Protection Program loans were sentenced last week in federal court, announced U.S. Attorney Clint Johnson.
First, on Oct. 23, 2023, U.S. District Judge Paul M. Arias-Marxuach sentenced William Mark Sullivan, 50, to 36 months in prison. Sullivan’s wife, Michelle Cadman-Sullivan, 43, was sentenced on Oct. 25, 2023, to 24 months in prison. The Sullivans pleaded guilty in June of 2022 to conspiracy to commit bank fraud. As a part of this case, the Sullivans fraudulently applied for approximately $2.7 million in Paycheck Protection Program loans from area banks. Judge Arias-Marxuach also ordered William Mark Sullivan and Michelle Cadman-Sullivan to serve 5 years of supervised release following their terms of imprisonment and to pay $743,776.98 in restitution to the Small Business Administration, the federal agency that guaranteed the loans.
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 also 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 further alleges that the Sullivans misrepresented the number of businesses they owned and operated, the duration of operation for each business, the number and names of employees, the monthly payroll for each business, and the way in which the loan proceeds would be used.
Second, on Oct. 24, 2023, U.S. District Judge Paul M. Arias-Marxuach sentenced Ladawn Shazzelle Pinkney to 6 months in federal prison followed by 6 months of home confinement and 2 years of supervised release for her participation in a Paycheck Protect Program loan fraud scheme. Judge Arias-Marxuach further ordered Pinkney to repay the U.S. Small Business Administration $41,828.46 in restitution.
As a part of her plea agreement entered in July of 2022, Pinkney plead guilty to wire fraud. She admitted that between March 20, 2021, and April 21, 2021, she made two fraudulent loan applications on behalf of a business that did not exist before the COVID-19 pandemic. According to the indictment in the case, Pinkney also received forgiveness for 100 percent of the PPP loans. In her applications for loan forgiveness, Pinkney falsely stated that she used the loan proceeds for payroll and other eligible uses of PPP loan proceeds.
“All three of these individuals repeatedly lied to banks to obtain government funds intended to retain employees at legitimate businesses during the height of the COVID-19 pandemic,” said U.S. Attorney Clint Johnson. “My office will continue to hold fraudsters accountable for misusing federal emergency assistance.”
“These sentencings send a clear warning that you will be brought to justice if you defraud the federal government of pandemic relief funds,” said Jon Ellwanger, Special Agent in Charge, Western Region, Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau. “We are proud to have worked with our federal law enforcement partners and the U.S. Attorney’s Office in this endeavor to hold fraudsters accountable for their crimes.”
“Conspiring to fraudulently obtain federal funds that are meant to provide assistance to nation’s small businesses is unacceptable,” said SBA OIG’s Central Region Special Agent-in-Charge Brady Ipock. “These sentences demonstrate that those responsible will be held accountable. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to pursuing justice in this case.”
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 prosecuted these cases.
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-form
Updated October 31, 2023