The Department of Justice (“DOJ”) continues to go after anyone who misuses CARES Act funds. Created to address the financial strain the COVID-19 pandemic forced on individuals and businesses alike, the CARES Act has also become the target of fraudsters and scammers alike. On February 17, 2021, a federal grand jury indicted Jasmine Johnnae Clifton, a 24-year-old woman from Charlotte, North Carolina, for fraud related to her receipt of a COVID-19 loan from the Small Business Administration (“SBA”) for almost $150,000.
According to the indictment, Clifton allegedly obtained an Economic Injury Disaster Loan (“EIDL”) based on false information. EIDL is an SBA program that provides low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters. In April 2019, Clifton created Jazzy Jas LLC, an online retail clothing sales business. Although she had already dissolved the business, Clifton submitted a loan application to SBA for Jazzy Jas on July 24, 2020 that included false information about revenues and fraudulent tax documents. Based on the false loan application, Clifton was awarded $149,900 in disaster relief funds that SBA had reserved for existing businesses effected by the COVID-19 pandemic. The EIDL funds were deposited directly into Clifton’s bank account, and she allegedly used the money to shop at Nordstrom, Ikea, Neiman Marcus, Rooms To Go, Louis Vuitton, Best Buy, and multiple diamond stores.
As CG attorneys have reported, the federal government’s crackdown on alleged fraud related to CARES Act funds continues. Business owners must take care in preparing loan applications and documenting the use of CARES Act funds. The attorneys at Chilivis Grubman represent both individuals and businesses in connection with government investigations and white-collar criminal prosecutions. If you need assistance with such a matter, please contact us today.