The U.S. Attorney’s Office for the Western District of Michigan Joins the DOJ’s Fraud Division, SBA and the SBA OIG in COVID-Era Loan Takedown Exceeding $245 Million in Fraud

Joint national takedown: 40 U.S. Attorney’s Offices, along with 20 federal and state investigative agencies, participate in two-month enforcement surge

GRAND RAPIDS, MICHIGAN – U.S. Attorney for the Western District of Michigan Timothy VerHey today announced that Cynoda Jonelle Sparkling, 35, of Lansing, pleaded guilty to wire fraud and aggravated identity theft in connection with defrauding three different federally funded COVID relief programs. Sparkling is scheduled to be sentenced on November 30, 2026, and faces a minimum of two years and up to 20 years in prison.

From June 12 to September 1, federal prosecutors across the country facilitated fraud enforcement actions spanning over 160 criminal defendants, including approximately 80 newly charged defendants, reaching approximately $245 million dollars in intended loss to American taxpayers.

The case was part of a nationwide enforcement action led by the Justice Department’s National Fraud Enforcement Division, the Small Business Administration, and the SBA Office of Inspector General targeting fraud in the SBA’s Paycheck Protection Program (PPP). The Western District of Michigan was a key participant in this surge effort.

Sparkling defrauded various COVID-era relief programs by stealing or attempting to steal $124,995 from the Paycheck Protection Program, $17,000 from the Economic Injury Disaster Loan program, and $262,248 from several different states’ unemployment insurance programs. She applied for the loans in her own name and in the names of third parties using stolen identities.

U.S. Attorney Timothy VerHey said, “Every federal district in America is prosecuting people like Sparkling, who saw an opportunity to defraud the taxpayers when the government rolled out COVID-era relief programs.  Sparkling will now face the consequences of her fraudulent conduct, and so will others that engaged in similar fraud.  I want our message to be clear:  if you are thinking of trying to defraud a federal program, you had better think again because you will not like what happens to you.”

“Pandemic loan relief was meant to keep American small businesses alive during government lockdowns—not line the pockets of fraudsters,” said Attorney General Todd Blanche. “The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications— but they will now be prosecuted to the fullest extent of the law.”

This summer surge shows what is possible when dedicated public servants across the  country work together with a single purpose,” said Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division. “Our mission is clear: protect taxpayer funds, safeguard the integrity of federal relief programs, and deliver justice to those who exploited them. We will remain steadfast every day—standing shoulder-to-shoulder with our partners—to identify fraud, pursue those responsible, and restore confidence in the programs meant to help American small businesses thrive.”

“Today’s announcement represents the largest-ever action against perpetrators of SBA fraud, with 870,000 suspended borrowers tied to $39 billion in suspected fraudulent PPP and COVID EIDL activity. In partnership with Vice President Vance and the White House Task Force to Eliminate Fraud, we’re putting fraudsters on notice: the federal government will no longer turn a blind eye to those who stole from taxpayers and exploited programs designed to sustain small businesses during the pandemic,” said SBA Administrator Kelly Loeffler. “With demand letters going out to suspected fraudsters, we’re also sending a clear message that they must repay their debts or face Treasury collections and possible federal law enforcement. Under this Administration, the free ride is over. We are restoring accountability, recovering taxpayer dollars, and protecting SBA programs for the legitimate small businesses they were created to serve.”

Operation No Doze brings a focused and coordinated approach to pursuing fraud in SBA’s pandemic relief programs,” said SBA Inspector General William Kirk. “By concentrating our investigative resources and working closely with SBA and our law enforcement partners, we are strengthening our ability to identify fraud, recover taxpayer funds, and hold accountable those who exploited programs created to help small businesses in a time of extraordinary need. This initiative makes clear that the passage of time does not diminish our commitment to accountability.”

The Federal Bureau of Investigation and the U.S. Department of Labor Office of Investigator General are investigating this case, and Assistant U.S. Attorney Clay Stiffler is prosecuting it. 

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.