Redmond man pleads guilty to defrauding over $600,000 from COVID-19 Payroll Protection Program
A 62-year-old man from Redmond pleaded guilty Thursday in the U.S. District Court in Seattle to conspiring to defraud the federal Paycheck Protection Program of $646,000 in COVID-19 relief funds, said U.S. Attorney Nick Brown.
Joseph Freeman registered with two companies to get forgivable Paycheck Protection Loans to protect the salaries of fake employees.
In May 2020, Freeman and his coconspirators used information he created in 2004 to claim $500,000 in PPP funds.
Freeman claimed Special Delivery LLC had 15 employees and a payroll of $200,000 per month when it really had no employees other than Freeman. Freeman used fake IRS forms to make it appear the company had employees and sought $500,000 in PPP funds.
On May 20, 2020, the loan proceeds were wired to Freeman’s bank. After receiving the funds, Freeman created an account with a payroll service to give out the funds to people who were not employees of the company.
On June 15, 2020, Freeman and his coconspirators submitted a second fake application.
Freeman claimed New Jack Trucking LLC had 10 employees and a monthly payroll of $58,400. Freeman and his associates said the business had been in operation since February 2020 even though the entity never had any real business activity. The coconspirators used fake IRS forms and a fake bank statement to make it appear New Jack Trucking had employees. On June 16, 2020, Freeman and his coconspirators received $146,000 for the fraudulent application.
Freeman gave some of the money to his coconspirators and used some of it for his own benefit.
In July 2020, after federal investigators detected the fraud and notified Freeman’s bank, around $220,000 of the loan proceeds were frozen and returned to the Small Business Administration. The net loss from the scheme is $426,666.
Freeman will be sentenced for the fraud conspiracy on May 16, 2023.
Conspiracy to Commit Theft of Government Funds is punishable by up to five years in prison and a fine of $250,000 or twice the gross monetary gain to the defendant or the gross monetary loss to the victims of the offense.
Prosecutors have agreed to recommend no more than two years in prison for Freeman.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to combat and prevent pandemic-related fraud.
For more information on the department’s response to the pandemic, visit www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
