HAMPTON, Va. – A convicted felon who served time for bank fraud charges got released from a halfway house, then a few months later receives about $35,000 in COVID-19 loan relief money, according to federal court records.
44-year-old Marlon McKnight is currently out on bond accused of wire fraud, theft of government property, and making false statements to the Small Business Administration.
Between November 2018 and May 2020, he served time after pleading guilty to his role in an elaborate bank fraud scheme.
Members of the group would obtain stolen personal information from victims then fraudulently obtain loans and loan proceeds from Langley Federal Credit Union, according to the documents.
In that case, investigators determined that many of the identity theft victims had been victims of the United States Office of Personnel Management data breach and resided in Colorado.
It states that a review of LFCU records and surveillance images identified McKnight as an individual who had received and negotiated check disbursements of fraudulently obtained vehicle loan proceeds as well as obtaining the proceeds of personal loans.
The group was ordered to pay restitution of over $113,000.
After getting released out of a halfway house in May 2020, federal prosecutors claim that McKnight then applied for three Economic Injury Disaster Loans for a McKnight Cleaning Service business in Hampton located on Diamond Hill Road and was given $35,000.
Federal prosecutors alleged that he states in the application that the business had gross revenue of $85,000 and three employees.
Prosecutors allege that the loan applications had false statements, misrepresentations, and omissions about the defendant’s income, employment, and his prior criminal record.
News 3 reached out to phone numbers connected to McKnight to ask about the allegations.
Someone texted back saying – "No comment. The accusations are false! Believe what you will." Further attempts to communicate were ignored.
It states he applied for two more EIDL loans then applied for a PPP Loan.
The second application was denied after a tax application wasn’t submitted.
It states when he applied for the third application using a different address for the business, he was allegedly told this was a duplicate application.
COVID-19 relief loan application asks the person if they have been convicted of a felony and prosecutors allege he did not report his prior conviction on all four applications.
Legal Analyst Sonny Stalling has reviewed several COVID relief loan cases in recent months.
"In this rush to get the money out, a lot of people took advantage of that rush and the federal government was not checking on who they were sending the money to and that’s how these people got this money and they took advantage of a system that was meant to help people get out of trouble," said Stallings.
He believes more should have been done to protect taxpayer money.
"I imagine they sent out a lot of money that taxpayers will never be get back," said Stallings.
McKnight was arrested on November 15 and out on a $5,000 bond.
He is expected in front of a judge on November 29, 2021 for an arraignment.