Two fraudsters sent to prison for COVID-19 fraud scheme

HOUSTON – A Florida man and Texas woman have been ordered to prison following their conviction of wire fraud during the COVID-19 pandemic, announced U.S. Attorney Alamdar S. Hamdani.

Dylan Kinlock, 30, Orlando, Florida, and Felicia Garza, 37, Houston, pleaded guilty in January to conspiracy to commit wire fraud in connection with a scheme to defraud the United States of COVID-related disaster loan proceeds.

Today, U.S. District Judge David Hittner ordered Kinlock to serve 56 months in federal prison, while Garza received 24-month-term of imprisonment. Both must also serve three years of supervised release following completion of prison terms. Additionally, the Court ordered Dylan Kinlock to forfeit to the United States $312,573.05 in funds found in a bank account as well as his home in Orlando. Kinlock was also ordered to pay restitution to the United States in the amount of $939,379, offset by the amount recovered by the forfeiture. 

Kinlock and Garza admitted they devised a scheme to solicit others to fraudulently apply for Paycheck Protection Program (PPP) loans the Coronavirus Aid, Relief and Economic Security (CARES) Act provided. The two utilized victims’ personal information to create falsified documents and applied for a PPP loan on their behalf.

The fraud scheme resulted in at least 241 fraudulent PPP loans which led to the distribution of more than $1 million. Kinlock received at least $939,379 in fee income from individuals he assisted in securing the fraudulent PPP Loans.   Garza was paid by Kinlock to refer PPP clients to him.  She also helped Kinlock file a fraudulent PPP loan application on her own behalf.

Numerous individuals residing in the Southern District of Texas applied for PPP loans through Kinlock. They were referred to Kinlock by Garza and they all reported that Kinlock attached fraudulent documents to their application without their knowledge, and the applications contained false statements about the number of employees their business had. 

The false documents included fictitious Schedule C tax forms reporting profit or loss from a business, 1099-MISC forms and invoices reporting incorrect income to qualify for the loans. Kinlock and Garza solicited each victim to execute a contract in which they agreed to share a portion of their PPP loans.

After clients received their PPP loan funds, Kinlock  directed the client to send fees through various means including direct deposit into a bank account or electronic payment methods such as Zelle, CashApp or Venmo. Fees ranged from $3000 to $4,000 per loan or 20% of the amount the client received.

Both used the monies for their personal benefit. Notably, Kinlock used some of the funds to pay off his home in Florida. As part of his plea, he also agreed to forfeit that residence.

The CARES Act is a federal law enacted March 27, 2020, to provide emergency financial assistance to the millions of Americans who suffered the economic effects caused by the COVID-19 pandemic.

Kinlock will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

Garza was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

IRS - Criminal Investigation conducted the investigation. Assistant U.S. Attorney Jay Hileman prosecuted the case.