Tri-Cities woman created a fake business to get $337,000 in COVID-relief money

A West Richland woman was sentenced to a year and three months in federal prison for fraud related to COVID-19 loans intended for small businesses struggling during the pandemic.

Jimia Rae Cain, 52, also must pay back about $337,000 she received in two federal loans.

She had previously asked that she be allowed to not repay $265,000 of that under a loan forgiveness program.

“I can’t underestimate how serious these offenses are,” said Judge Mary K. Dimke, during a sentencing hearing Thursday in the Richland, Wash., courthouse.

The nation was in crisis during the pandemic and businesses were on the verge of going under, she said. Congress threw a lifeline to small businesses, relying on people’s honesty, to get money to struggling businesses as soon as possible, she said.

The seriousness of Cain’s behavior was compounded by the fact that loan programs under the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, ran out of money before many deserving small businesses in Eastern Washington could not get federal loans, Dimke said.

Cain first applied for a CARES Act Economic Injury Disaster Loan for her purported company, Americore, in July 2020. She received a low-interest loan for $71,900.

The next month she applied for a CARES Act Paycheck Protection Program Loan and received about $265,000, which she later applied to have forgiven.

In applying for the loans she made fraudulent claims and in some cases fabricated documents to support the claims, according to court documents.

For the larger loan she claimed to have seven employees and a monthly average payroll of $106,000. She backed that up with written payroll summaries and a federal unemployment tax return she created for the loan application.

But Americore was not an active business, she did not file federal tax returns and had no employees, revenue or payroll prior to 2020, according to court documents.

She also claimed that her only prior convictions were for minor vehicle violations, but she had multiple other prior convictions, including fraud and multiple gross misdemeanor convictions that made her ineligible for the loans, according to court documents.

Her application to have the PayCheck Protection Program loan forgiven was denied in March 2022 because Cain did not submit required IRS documents. No such documents had been submitted to the IRS.

Request for no prison time

Dan Fruchter, assistant U.S. attorney, requested a prison sentence of one year and six months.

He said in court documents that Cain created a fictitious business to defraud the federal loan program, while hundreds of thousands of small businesses closed, many to never reopen, and millions of Americans were out of work due to the impacts of the pandemic.

Cain’s attorney, Jennifer Barnes of Yakima, asked for five years probation and no prison time for Cain.

“I do take full responsibility for my actions,” Cain told the judge Thursday.

She and her attorney said she had an undiagnosed mental illness at the time she applied for the loans and was self medicating with alcohol.

But since diagnosed she has gotten appropriate medication, and she is in a good mental state and not abusing alcohol, she said. She also has a job.

“It is like starting over to find out I need medication,” she said.

Dimke commended Cain for the work she had done to turn her life around.

But the sentence must reflect the seriousness of the crime, the judge said. She pointed out that Cain had spent nearly two years making numerous false statements and manufacturing paperwork to secure the loaned money.

When Cain finishes her prison sentence she faces three years of probation.

She pleaded guilty to a charge of false, fictitious or fraudulent claims.

COVID loan strike force

The Eastern Washington U.S. Attorneys Office created a strike force to root out and combat pandemic-related fraud.

“Holding those accountable who abused these programs is critical to the strength and safety of our community in Eastern Washington,” said U.S. Attorney Vanessa Waldref. “The strike force works to ensure that limited resources are used to protect our local small businesses and the critical jobs and services that they provide for the community.”

The CARES Act provided billions of dollars in aid during the pandemic, with the vast majority not paid back. That includes hundreds of millions of dollar disburses in Eastern Washington, according to the U.S. attorney’s office.

In addition to the strike force, the case was investigated by the Office of Inspector General of the Small Business Administration and the Department of the Treasury Inspector General for Tax Administration.