Former co-owner of Gahanna bar admits making fraudulent federal COVID loan applications
A former Columbus resident has pleaded guilty to fraudulently obtaining and using more than $1 million in applications for federal COVID-19 relief loans for businesses.
James P. Dawson, 40, pleaded guilty Tuesday in U.S. District Court in Columbus to wire fraud and making false statements related to five coronavirus relief Paycheck Protection Program (PPP) loans and four Economic Injury Disaster loans (EIDL).
Dawson, who currently resides in Orlando, Florida, formerly resided on Columbus' Northeast Side near New Albany.
According to court documents, between April 2020 and October 2020, Dawson submitted five fraudulent applications to obtain PPP loans, two of which were approved and funded for an undisclosed amount.
He also submitted four fraudulent applications to obtain the EIDL loans, none of which were funded. But in three of those loans, he received advances on a claim to which he was not entitled, according to the U.S. Attorney's Office for the Southern District of Ohio.
All told, Dawson sought more than $1.1 million in fraudulent loans, and lenders disbursed over $200,000 as a result, federal prosecutors say.
The bogus PPP applications misstated the operations of businesses he was involved with, including monthly payroll expenses and number of employees.
One of the businesses, Stadium Bar LLC, opened as a sports bar at 101 Mill St. in Gahanna's Creekside development. Dawson, who identified himself as a co-owner of the business, certified as he did with other false claims that the business was in operation on Feb. 15, 2020.
However, federal prosecutors say the certificate of occupancy for the bar's location was not signed until March 20, 2020, the bar did not have a liquor license until May 26, 2020, and Dawson later admitted in a law enforcement interview that it did not open until June 20, 2020.
Read More: Upscale sports bar opens in Gahanna
Stadium Bar eventually filed for Chapter 11 voluntary bankruptcy in 2022 and closed, court records indicate.
Created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the Paycheck Protection Program authorized qualifying small businesses to receive forgivable loans to help pay payroll costs, rent utilities, interest on mortgages, and other permissible expenses. The size of the PPP loan a particular business could receive was based in part on its average monthly payroll costs. PPP loans were entirely forgivable if the funds were used for specified expenses.
In order to obtain a PPP loan, a business was required to submit a loan application to an approved lender. The loan application was required to be signed by an authorized representative of the business and to contain certain information, such as average monthly payroll expenses and number of employees. Applicants were also required to provide supporting documentation, such as federal tax returns and other financial documentation. Any PPP loans that were funded by lenders were fully guaranteed by the U.S. Small Business Administration.
The CARES Act also expanded the EIDL Program, which authorized qualifying small businesses to receive loans to help pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred. The SBA also offered an EIDL Advance that was designed to provide emergency economic relief to businesses that were experiencing a temporary loss of revenue. The EIDL Advance was considered a grant and was not required to be repaid. The maximum advance amount was $10,000.
Dawson's sentencing has not been set pending a pre-sentence investigation report. He could face up to 20 years in prison and a $250,000 fine for the wire fraud charge. The false statement charge carries a maximum penalty of five years in prison and a fine of up to $250,000.
dnarciso@dispatch.com
@DeanNarciso
This article originally appeared on The Columbus Dispatch: Former co-owner of Gahanna bar pleads guilty to COVID loan fraud
