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Recently, federal and state agencies have begun investigating COVID-19 fraud as part of a larger campaign to combat fraud in government assistance programs.
In recent months, the United States has charged more than 1,000 defendants with criminal and civil offenses; these cases are largely based on data analysis of loan and grant approval approvals.
According to federal officials, Nikki Mitchum, 45, from Stockbridge, Georgia was ordered to repay $1.8 million for her role in submitting fraudulent disaster-related loan applications related to COVID-19. She was sentenced to 51 months in prison for her participation in the fraud.
In March 2020, Mitchum and her husband Malik Mitchum, 26, a junior enlisted Air Force member from Hampton, Virginia, created fake business entities. They claimed ownership of companies such as "Alpha 2 Omega Logistics," "Southern by the Belle," A2O Auto Brokers," Pur Pressure" and Day and Night Trucking.
Mitchum and her husband submitted 13 fraudulent loan applications between March 2020 and May 2121 with false statements regarding income, employment status, and claimed business entities. Furthermore, four additional applications were submitted using their IP addresses as identification.
Nikki Mitchum and her co-conspirators engaged in a fraudulent scheme to obtain disaster loans from the Small Business Administration. These funds were supposed to assist small businesses facing expenses related to COVID-19 pandemic.
Nikki Mitchum and her co-conspirators engaged in a conspiracy to obtain loans through the Small Business Administration's Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program loan (PPP), both established or expanded under the Cares Act, according to prosecutors. They falsely represented that their businesses were struggling and needed assistance, according to authorities.
Mitchum and her co-conspirators also purchased a variety of luxury items, such as a Rolex watch worth nearly $39,000. As a result of the fraud, government relief funds were depleted and taxpayers had to cover the expenses.
On January 12, 2019, Mitchum and her co-conspirators Malik and Jenna Mitchum pleaded guilty to conspiracy to commit wire fraud against a financial institution in connection with these fraudulent applications. In addition to paying out restitution, each will serve five years of supervised release as well as paying monetary penalties.
Today, Assistant U.S. Attorney Jessica Aber and Special Agent in Charge Brian Dugan from the FBI's Norfolk Field Office announced the sentencing for this case that was investigated by the Newport News Financial Crimes Task Force - a collaborative partnership of local, state and federal law enforcement agencies to combat financial crimes in the region.
On Tuesday, the United States revealed that Stockbridge woman was ordered to repay $1.8 million for her role in a fraud conspiracy that defrauded millions of dollars in disaster-related loans to the government.
Malik Mitchum, 26, and Jenna Mitchum, 25, both of Hampton, Virginia, submitted dozens of fraudulent applications for government benefits for businesses they falsely represented were struggling due to the COVID-19 pandemic. Altogether, they submitted over 40 false applications that combined to defraud the government out of more than $5 million.
False claims were made about government-funded Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans, which were supposed to assist small businesses cover expenses that would otherwise need to be covered by the government.
Prosecutors allege Nikki Mitchum was involved in a scheme to submit false loans for kickbacks from other participants. She and her co-conspirators formed fictitious businesses to receive these benefits, such as "Alpha 2 Omega Logistics," "Southern by the Belle," "A20 Auto Brokers," "Pure Pressure," and "Day and Night Trucking."
Nikki Mitchum not only submitted false claims for loans, but she and her co-conspirators also created invoices and other records in the name of businesses she falsely represented were struggling due to the pandemic. Furthermore, they made numerous false statements on their tax returns as well.
Nikki Mitchum's agreement with the government calls for her to pay restitution in the amount of $1.8 million for any losses caused by her role in a fraud conspiracy. Furthermore, she is linked to an overall total of $5.8 million in intended fraud loss - far more than what was actually awarded to business owners by the government.
The case was investigated by the Newport News Financial Crimes Task Force, a collaboration of local, state and federal law enforcement agencies to combat financial crimes on Virginia Peninsula. Led by Eastern District of Virginia, this task force includes representatives from federal, state and local law enforcement agencies such as FBI, U.S. Department of Justice, Health & Human Services Department, Virginia State Police and others.
Nikki Mitchum, of Hampton, Virginia was charged with conspiracy to commit wire fraud in connection with the federal program providing disaster loans and other financial assistance for small businesses struggling due to the pandemic.
According to a news release issued by the federal government, she and her husband intentionally misrepresented their income, employment status, and claimed business entities in order to receive PPP and EIDL loans between March 2020 and May 2021 from the U.S. government. Additionally, they allegedly spent the money on luxury items like a Rolex watch worth $39,000 plus used other people's personal identifying information when making fraudulent loan applications.
Prosecutors allege that Mitchum and her husband submitted more than 19 false applications for disaster-related loan benefits during the course of their criminal scheme. Furthermore, they were linked to more than 20 other fraudulent cases through either an IP address used when submitting them or wire transfers sent from it, according to prosecutors.
According to charges, the couple falsified information regarding their income, employment status and claimed business entities in order to receive more than $5 million in COVID-19 loan benefits. They allegedly used other people's personal identifying information on loan applications and submitted false claims for government assistance under the false pretense of owning a business, according to a news release.
Prosecutors allege the couple, who held five small businesses but were actually junior enlisted Air Force members and unemployed, submitted 19 fraudulent applications for disaster-related loan benefits between March 2020 and May 2021 with false statements about their income, employment status, and claimed business entries, according to a news release.
Prosecutors claim they used the funds to purchase two homes in Utah and Michigan, totaling almost $1 million each. They also allegedly spent money on other fraudulent expenses such as travel and entertainment, according to prosecutors.
Malik and Jenna Mitchum admitted on Wednesday to conspiracy to commit wire fraud against a financial institution, according to a press release from the federal government. If found guilty, they face up to 30 years in prison when sentenced later this month. According to prosecutors in the news release, most sentences for federal crimes are less than the maximum penalties; however, judges have discretion over imposing additional monetary fines alongside restitution which could lengthen an individual's overall term in prison.
Nikki Mitchum, 45, of Stockbridge, must pay back $1.8 million for her role in a fraud involving COVID-19 loan programs. In an incident that stemmed from her employment at the Department of Social Services, Mitchum pleaded guilty to conspiracy to commit mail and wire fraud.
She and her co-conspirators fraudulently submitted 30 fraudulent applications for pandemic unemployment assistance, economic injury disaster loans (EIDLs) and the federal Paycheck Protection Program. Court records reveal that Mitchell used personal information of Virginians obtained from a government database to make false claims for unemployment benefits and EIDL loans.
COVID loan fraud is an illegal scheme to defraud the government of funds through these programs and can be perpetrated by anyone, from individuals to businesses or other entities. This offense carries grave repercussions that may affect lives forever.
In this instance, Mitchell was able to secure funding for COVID-19 by misusing Virginians' personal information. She then submitted false applications for unemployment benefits, EIDLs and PPPs in the name of companies she claimed she owned or operated.
She submitted false payroll and tax documents in support of the loans she requested. As a result, she must make restitution to the VEC of $1,158,674 and to the Small Business Administration - which regulates EIDLs - of $64,166.
On Tuesday, Pathan informed the court that Mitchell was a frequent "fraudster," submitting more than 50 false unemployment claims each week. She "reaffirmed" her fraud 200 times a month by recertifying those claims each week, according to Pathan's account.
Throughout her trial, she acknowledged making several false statements in her loan applications. Furthermore, she was ordered to make restitution to both Department of Social Services and Small Business Administration in her own name.
A growing problem exists with defrauding the government of COVID-19 loan funds, according to a new academic study. Researchers discovered that fraudulent COVID-19 loans had grown dramatically over the past year as online lenders combined technology and financing to become major players in these programs, resulting in billions of dollars worth of fraudulent loans.