BREAKING: Multi State FEDERAL Operation Leads To Nearly A Dozen INDICTED- This Is BIG

10 defendants indicted in multi-state, fraudulent COVID-19 related business loan scheme

NEWNAN, Ga. – Ten defendants, who operated as part of a larger group, have been indicted for participating in a wide ranging, multi-state scheme to submit fraudulent loan applications on behalf of non-existent businesses as part of the Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP).

“The impact of COVID-19 on small businesses around the country has been devastating,” said Acting U.S. Attorney Kurt R. Erskine.  “The defendants allegedly abused both programs by submitting fraudulent applications and obtaining thousands of dollars that should have gone to support struggling businesses.  We will work tirelessly to protect the integrity of the EIDL and PPP and to help small businesses stay afloat.”

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“The COVID-19 pandemic has caused financial hardships for many hardworking business owners across the nation.  The CARES Act was signed to provide economic assistance to keep companies afloat while navigating through these uncertain times,” said Tommy D. Coke, Inspector in Charge of the Atlanta Division.  “Postal Inspectors are committed to aggressively pursuing investigations in which the U.S. Mails are used to facilitate criminal schemes.”

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According to Acting U.S. Attorney Erskine, the indictment, and other information presented in court:  On August 11, 2020, agents with the U.S. Postal Inspection Service (USPIS) and the Drug Enforcement Administration executed a search warrant at the home of Alicia Quarterman in connection with an ongoing narcotics trafficking investigation.  A package containing methamphetamine hidden in dog food containers had been mailed to Quarterman’s home.  As part of the court-authorized search, law enforcement seized Quarterman’s cell phones and discovered a handwritten ledger with the personal and banking information of several individuals.

After obtaining a second search warrant for the cell phones, USPIS inspectors uncovered hundreds of text messages and photos related to an additional crime, fraudulent EIDL and PPP business loans.

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The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law passed in March 2020 that provided $2.2 trillion dollars in emergency financial assistance to the millions of Americans who are suffering the economic effects caused by COVID-19.  The provisions of the CARES Act, in conjunction with an officially declared disaster by the United States Government, allowed the Small Business Administration (“SBA”) to offer EIDL funding to business owners negatively affected by COVID-19.  The EIDL application information, submitted by the applicant, was used by SBA systems to calculate the amount of money the business was eligible to receive in the form of a loan.  However, in conjunction with the submission of an EIDL application, by having clicked on and checked a box within the on-line application, an applicant could request and then receive up to $10,000.00, an EIDL Advance which did not have to be repaid.

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Another source of relief from the March 2020 CARES Act is the PPP which allows qualifying small businesses and other organizations to receive PPP loans to pay payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be entirely forgiven if the business spends the loan proceeds on these expense items within a designated period of time and uses a certain percentage of the PPP loan proceeds for payroll expenses.

Once Quarterman and her co-conspirator, Katrina Lawson, who is a former deputy sheriff for Fulton County, Georgia and is still a certified peace officer, became familiar with the requirements and applications for the EIDL program and the PPP, they allegedly devised a scheme to submit fraudulent business loan applications on behalf of their friends and family who did not actually own businesses.  Quarterman would recruit co-conspirators who would send her their personal and banking information mostly via text message, and then Quarterman would send that information to Lawson who would submit the applications to the SBA.  After the fraudulent loans were paid out by the SBA or partner banks, the co-conspirators completed their scheme by allegedly paying Quarterman a “fee” from the proceeds of the fraudulent loans which she would split with Lawson.

Some of Quarterman and Lawson’s co-conspirators also allegedly recruited additional participants to the scheme and then sent their information to Quarterman for fraudulent loan applications.  As part of their crimes, the defendants not only submitted false information for the business loans, but for the PPP, they also allegedly created fake Internal Revenue Service documentation to support the applications.

Besides Alicia Quarterman, 38, of Fayetteville, Georgia, and Katrina Lawson, 41, of Houston, Texas, the following individuals also participated in the scheme and are charged in the indictment:

  • India Middleton, 34, of Accokeek, Maryland,
  • James McFarland, 56, of Atlanta, Georgia,
  • Tranesha Quarterman, 33, of Atlanta, Georgia,
  • Darryl Washington, 66, of Atlanta, Georgia,
  • Adarin Jones, a/k/a Adrian Jones, 42, of Atlanta, Georgia,
  • Katie Quarterman, 28, of Atlanta, Georgia,
  • Nikia Wakefield, 42, of Rockville, Maryland, and
  • Victor Montgomery, 43, of Washington, D.C.,

Overall, between July 1, 2020 and August 11, 2020, Quarterman sent Lawson the information for about 48 different individuals, and she allegedly completed approximately 58 fraudulent EIDL applications, seeking $490,000.  In that same time frame, Lawson allegedly submitted 11 fraudulent PPP loan applications on behalf of many of the same individuals in an attempt to obtain at least $224,000.  The defendants are charged with various counts of conspiracy to commit wire fraud, wire fraud, bank fraud, mail fraud, and money laundering.

Members of the public are reminded that the indictment only contains charges.  The defendants are presumed innocent of the charges, and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by the U.S. Postal Inspection Service.

SOURCE – Department of Justice (DOJ)

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