NEWPORT NEWS, Va. – A federal grand jury returned an indictment Friday charging a Norfolk man with submitting fraudulent disaster-related loan applications in connection with the COVID-19 outbreak that resulted in the disbursement of more than $190,000 in proceeds.
“The COVID-19 pandemic continues to affect our communities in innumerable ways,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “The CARES Act provides emergency relief to help mitigate some of those effects. Fraud targeting CARES Act benefits unjustly diverts these resources away from the people and businesses who most need them. EDVA remains steadfastly committed to prosecuting those who seek to exploit this crisis for their own personal gain.”
According to the indictment, from at least March 2020 to May 2020, 39-year-old Joseph Cherry II allegedly engaged in a scheme to fraudulently obtain disaster-related loan benefits in the form of United States Small Business Administration (SBA) sponsored Economic Injury Disaster (EIDL) loans and a Paycheck Protection Program (PPP) loan. These SBA programs, initiated and expanded under the CARES Act, are designed to provide support for small businesses for expenses related to the COVID-19 outbreak.
“Providing false statements to gain access to SBA’s programs will be aggressively investigated by our office,” said Hannibal “Mike” Ware, Inspector General of the U.S. Small Business Administration. “SBA OIG and its law enforcement partners are poised to root out fraud in SBA’s programs and bring wrongdoers to justice. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
According to the indictment, Cherry, who was serving a term of federal supervised release, allegedly submitted applications for these loans that contained false statements and misrepresentations related to his income, employment, claimed business entities and prior criminal record. The indictment alleges that Cherry fraudulently obtained proceeds of over $190,000 in April 2020. Further, in a few day period, Cherry converted to cash or a cashier’s check approximately $140,000 of these proceeds.
“The immediacy with which the Deputy Marshals responded in making this arrest should send a clear message to those intending to misuse the financial resources our government is providing to those trying to recover from the ongoing pandemic,” said Nick E. Proffitt, U.S. Marshal for the Eastern District of Virginia. “The public should take comfort in knowing that even in this difficult COVID-19 environment, Deputy United States Marshals are at work each and every day to help ensure the community is safe, and justice is served.”
Cherry is charged in a 10-count indictment with charges of wire fraud, theft of government property, false statements to the small business administration and money laundering. If convicted, he faces statutory maximums ranging from 10 to 30 years in prison on each count. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
“Unfortunately, during these uncertain times, individuals fraudulently take advantage of programs meant to help those in need,” said Kelly R. Jackson, the IRS-CI Special Agent in Charge. “We will prioritize investigations of these shameless perpetrators and work with our law enforcement partners to bring these individuals to justice.”
Authorities say this kind of fraud reaches deep into the community by diverting critical funds intended to help struggling businesses survive and help people hold onto their livelihoods. Anyone who has information on CARES Act and other COVID-19-related fraud is asked to submit a tip to the FBI at tips.fbi.gov.
If you think you are a victim of a scam or attempted fraud involving COVID-19, contact the National Center for Disaster Fraud Hotline at 866-720-5721 or via email at email@example.com. Members of the public in the Eastern District of Virginia are also encouraged to call 804-819-5416 or email USAVAE.COVID19@USDOJ.GOV to reach their local Coronavirus Fraud Coordinator.