Charleston Man Pleads Guilty to COVID-19 Relief Fraud Scheme | USAO-SDWV | #phishing | #scams


CHARLESTON, W.Va. – A Charleston man pleaded guilty today to wire fraud, admitting to a scheme to defraud the Paycheck Protection Program (PPP) of over $41,666 in COVID-19 relief loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

According to court documents and statements made in court, Malik Breckenridge, 26, of Charleston, applied for and obtained two PPP loans on behalf of his purported business, Malik Breck, between April 4, 2021, and August 10, 2021. Malik Breck was not a registered business entity in West Virginia and was not engaged in substantial, legitimate business activity on or before February 15, 2020. Breckenridge admitted that he falsely stated that Malik Breck was established in 2014 and operating on February 15, 2020. Breckenridge further admitted that he submitted a false Internal Revenue Service (IRS) Form 1040, Schedule C Profit or Loss from Business reporting that Malik Breck had earned $180,489 in gross income during 2019.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of forgivable loans to small businesses for job retention and certain approved expenses, through the PPP. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities.

A Florida lender processed both of Breckenridge’s PPP loan applications. Each loan totaled $20,833. Breckenridge admitted that he later applied to have both PPP loans forgiven even though he had not spent the loan proceeds on permissible business expenses. The SBA forgave the loans on August 8, 2021.

“This is the first fraud conviction related to COVID-19 in the Southern District of West Virginia, and sadly, it probably won’t be the last,” said United States Attorney Will Thompson. “PPP funds offered a lifeline to small businesses during the pandemic, and this office is determined to hold accountable those who undermine these needed programs through fraud and abuse. This office will continue to prosecute those who take advantage of government programs that are designed to help people who are hurting.”

Thompson commended the West Virginia State Police and the United States Secret Service for their investigative work in the case.

Breckenridge is scheduled to be sentenced on November 17, 2022, and faces a maximum penalty of 20 years in prison, three years of supervised release and a $250,000 fine. Breckenridge also agrees that he owes $41,666 in restitution.

United States District Judge Irene C. Berger presided over the hearing. Assistant United States Attorney Kathleen Robeson is prosecuting the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 2:22-cr-84.

 

 

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