Plainview woman sentenced in PPP loan fraud case

A federal district judge in Lubbock told a Plainview woman who admitted to concealing a $3.5 million Paycheck Protection Program Loan fraud scheme that the greed and lack of remorse she displayed justified a sentence at the top end of the sentencing range.

U.S. District Judge James Hendrix on Thursday handed a two-and-1/2 year prison sentence to Hope Leticia Hastey, 50, the founder of a non-profit group aimed at benefitting people with intellectual disabilities.

Hastey faced up to three years in prison after pleading guilty in August to a count of misprision of a felony, admitting to her role in the multi-million dollar Paycheck Protection Program Loan fraud scheme.

A pre-sentencing report completed by the U.S. Probation Office initially recommended to the court a guideline of 17 to 24 months in prison.

Hastey, who was out on bond, appeared before U.S. District Judge James Hendrix with her attorney, Heath Enix Hyde, who asked the court to place his client on probation.

However, Hastey's guideline punishment range was increased to 24 to 30 months after Hendrix rejected what's called an acceptance of responsibility reduction after prosecutors said Hastey refused to provide them with her financial statements.

She was one of two people charged in the scheme that funneled about $3.5 million worth of PPP loans to three Plainview entities that Hastey owned.

Andrew Travis Johnson, 59, who worked as Hastey's bookkeeper, was sentenced in August to 15 years in prison after he pleaded guilty to to three counts of bank fraud, one count of aggravated identity theft, and one count of engaging in monetary transactions in property derived from unlawful activity.

Johnson admitted to orchestrating the fraudulent payroll protection plan scheme in which he used inflated employee numbers and payroll information to apply for loans under the federal Payment Protection Program and used other people's identities without their knowledge or consent to create bank accounts where the money was deposited.

The program provided government-backed, low-interest, loans to business owners to allow them to keep their employees during the economic slump caused by the COVID-19 pandemic. The program also allowed the loans to be forgiven.

Hastey admitted to knowing about the scheme and failing to report it to authorities.

Two of those entities were Radar Foundation, a non-profit that organized fundraisers for people with intellectual limitations, and Radar Supports, an organization that provided speech and occupational therapy services.

Radar Supports employed about 10 people while the foundation had a handful of employees hired on an ad hoc basis. However, Johnson inflated the entities' employee roster and payroll when he applied for the PPP loans. Some of the employees listed either didn't exist or were clients of the entities. He also provided false IRS forms and employee lists as part of the application.

The third entity, Radar Supports Construction, was a bogus business created for the purposes of obtaining the PPP loans.

The bank accounts used to deposit parts of the loans were under Hastey's control.

From April 2020 to April 2021 Johnson fraudulently obtained 27 loans totaling more than $3.8 million from the paycheck protection program. Johnson also obtained forgiveness for the loans, which meant they didn't need to be repaid.

Johnson also obtained more than $436,000 worth of PPP loans for 11 independent contractors. At least four of the loans' recipients were unaware that Johnson applied for the loans under their names. Two of whom were relatives and two were colleagues. None of them knew of the loans.

Johnson and Hastey used the money he fraudulently obtained to buy multiple vehicles, and a home in south Lubbock. They also spent the money on home renovations, vacations, clothing, cosmetic surgery, college tuition wedding expenses and heavy equipment to help family members start new businesses.

The court documents did not indicate how authorities discovered the fraud.

Meanwhile, Hastey signed paperwork at First United Bank for the first draw loans for Radar Supports and Radar Supports Construction, including the loan applications, promissory notes, corporate resolutions and disbursement authorizations.

All loan applications included certifications that the loan proceeds would be used for payroll costs and other business-related expenditures.

Johnson told investigators that Hastey believed at the time that she was signing documents related to government grants.

However, investigators believed Hastey at some point learned the loans were obtained fraudulently and failed to report it to authorities.

Instead, she tried to cover up the fraud by making it appear the loans were being used for payroll purposes. In one attempt, she wrote an $8,000 check to a colleague with a memo indicating it was a month's salary. Haste never gave the money to the colleague but deposited it into another bank account. In fact, the colleague didn't know about the check.

In court, Hastey apologized for her actions and the pain she caused her family.

"I will never break the law again," she said.

Hendrix told her certain factors weigh in her favor, including her negligible criminal history and evidence Johnson was the architect of the fraud scheme.

"I wondered if it would have happened without (Johnson)," Hendrix said.

Those factors spared her the maximum sentence.

However, Hendrix told Hastey the evidence showed her conduct displayed a level of greed and disregard for the consequences that painted a picture of "brazen fraud."

"This involved a federal program designed to help people get through a very trying time in our country's history," he said.

He found probation or even a sentence on the lower end of the guidelines was "out of the realm of realistic possibility."

"You knew what was happening," he told her. "You knew it was wrong and failed to report it for years. Instead, you used the money you obtained for things you wanted ... just your own personal slush fund."

Before handing down his 30-month sentence, Hendrix heard from Elizabeth Ann Schovajsa of Abernathy, a victim of Hastey and Johnson's earlier fraud unrelated to the load scam.

Schovajsa told the court that Johnson came to her in 2018, promising to renovate her home. She said she gave Hastey her credit card information to pay for $15,000 in construction supplies that never came.

She said she spent the next two years hounding Johnson and Hastey for work that was never done and for receipts for the supplies she paid for.

Her credit card statements showed the money went to Radar Supports.

"I never heard of these companies before," she said.

Schovajsa said she called Hastey, who at that point was engaged in the PPP loan scam, to ask about her money. She said Hastey's explanations changed during the call and the conversation quickly turned sour with Hastey threatening to file harassment charges against her.

Once Schovajsa learned of Hastey's charges for the PPP loan scam, she realized that Hastey and Johnson stole her money.

She said while the two used the stolen money to buy nice homes, she was living in the broken-down home that was never fixed.

"Ms. Hastey spent all the money selfishly on herself," she said. "(Johnson) wore sheep's clothing to gain my trust and Hastey completed the crime."

Prosecutor Anne Howey argued that a substantial sentence was necessary in this case.

"To allow the defendant to serve probation sends a message that crime, in fact, pays," she said. "That the benefits outweighs the cost."

While people were losing their livelihoods and loved ones during the COVID-19 pandemic, Hastey and Johnson stole taxpayer money to live lavishly, she said.

"She benefitted big," Howey said.

She said evidence before the court showed Hastey's actions were not a lapse in judgement or even the first time she's stolen.

She said with the millions Hastey stole from the government, she could have paid back the money she owed Schovajsa.

"Instead, she threatened her," Howey said. "That speaks volumes about her character."

Hendrix ordered Hastey to pay Schovajsa $15,000 in restitution before she pays back the $3.5 million she stole from the PPP program.

Hendrix gave Hastey until Jan. 25 to surrender to the Federal Bureau of Prisons to begin serving her sentence.

This article originally appeared on Lubbock Avalanche-Journal: Plainview, Texas woman sentenced in federal PPP loan fraud case