ST. LOUIS — Federal prosecutors here have charged more than a dozen people with lying to receive loans or grants since the start of the COVID-19 pandemic. One bought a Maserati. Others went on vacation. Another spent thousands at Neiman Marcus, Ulta Beauty and Victoria’s Secret.
And more are almost certain to come: Prosecutors have dozens of open cases in the works.
“It’s a big deal,” said Assistant US Attorney Gwen Carroll, who is in charge of white-collar prosecution in the St. Louis office. Federal agents, she said, keep finding people trying to run the system.
Pandemic-related fraud came under the microscope this month when former St. Louis County Jail official Tony Weaver was charged with submitting four grant applications on behalf of a local businessman in exchange for splitting the profits, according to court documents.
Federal officials said nearly 1,500 people have been charged across the country with making fraudulent claims for pandemic aid. Last week, they estimated that as much as 20% (tens of billions of dollars) could have been awarded to fraudsters through a single Small Business Administration loan program.
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The wave of fraud began in March 2020 when Congress passed the Coronavirus Aid, Relief, and Economic Security Act, as businesses across the country were forced to close to stop the spread of the virus.
Carroll, a longtime fraud prosecutor, recalled sitting in a conference room at the FBI with other investigators and reading the CARES Act distribution guidelines in May 2020. The loans were designed to be distributed quickly with few interim measures, a recipe for abuse, he said.
“It’s almost as if we were standing on the beach and seeing a tidal wave far off in the distance,” he said.
In the coming months, more than 142,000 Missouri borrowers would receive $4.6 billion just as part of the Paycheck Protection Program. Trillions of dollars would be distributed through the CARES Act and subsequent coronavirus relief packages.
As all the money flooded in, so did the accusations of fraud.
Among those charged was Susan Hampe, a woman in her 70s from St. Louis County who had been convicted twice of defrauding others, including her sister. Hampe pleaded guilty in April to applying for enhanced COVID-19 unemployment benefits in multiple states even though she was ineligible.
Then there was Robert Williams, 59, of St. Louis County, who had a string of previous theft and fraud convictions and was sentenced in April to more than 10 years in prison for lying to receive $2.7 million in coronavirus aid. . Prosecutors said he misrepresented information on 30 applications for his own business and helped others file an additional 23.
And on Friday, a St. Louis woman, Porshia L. Thomas, 31, pleaded guilty to lying on applications to receive $291,600 in payroll protection loans for her 15-person company, Couture Trading Inc., in Beverly Hills, California, according to court records. She spent the money on living expenses, personal purchases and a 2018 Audi S5 Sportback Quattro.
The fraud was not limited to business aid.
Carroll said investigators have also opened consultations in the region, the Eastern District of Missouri, for people hoping to take advantage of housing assistance.
In a recent case, Semaj Portis, 43, of St. Louis County, admitted she posed as a landlord and used fraudulent leases when she applied for rental assistance 52 times in a 10-month period. She received $267,239 in aid, according to court documents.
The CARES Act and other pandemic relief programs created a “lucrative opportunity for fraudsters,” he said.
Still, he said, many companies were saved by money.
“The problem is not the program,” he said. “It’s that people take advantage of opportunities.”