As National Public Radio co-host and producer Jesse Thorn put it recently, we are a year into this novel coronavirus and the novelty has worn off. We have passed the one year mark for when most Americans realized that COVID-19 was about to turn our personal and work lives upside down. The chaos of this new reality resulted in a host of pandemic related reverberations inside government agencies including DoJ.
I personally earmark March 13 as the day the pandemic truly hit home for me. This was the last day I took the Metro into my Washington D.C. office. Schools in my area closed and court orders dripped in one by one cancelling in person hearings. On the heels of my last Metro ride, main DoJ, just a few blocks from my office, began a new era of pandemic anti-fraud enforcement strategies. Since then, I have been keeping a close eye on pandemic-related white collar investigations and prosecution patterns to assist in my defense of businesses and individuals facing government scrutiny for their participation in pandemic relief loan programs.
On April 1, 2020, DoJ announced that $16 million in federal funds from the Coronavirus Emergency Supplemental Funding package (CSEF) would be made available to help Virginia public safety agencies and local government agencies to respond to challenges posed by the outbreak of COVID-19. DoJ awarded grants on a rolling basis and by May 1, the U.S. Attorney’s Office for the Eastern District of Virginia (“EDVA”) announced that $10.8 million was authorized for this effort. This enormous CSEF award to various Virginia jurisdictions was supplemented with an additional $2 million by the end of May. With all of this funding in place, a wave of investigations and prosecutions was inevitable.
Within a few days of the announcement of Virginia’s CSEF awards, on May 29, 2020, EDVA first publicized its indictment against Joseph Cherry for COVID-19 relief loan fraud. Next, on June 20, 2020, EDVA announced the arrest of Monica Jaworska and her husband and co-defendant, Tarik Jaafar, for COVID-19 relief loan fraud.
Although EDVA prosecutions appeared to begin with a running start, the momentum was not sustained. As of today, there are only a total of six federal prosecutions for COVID-19 relief loan fraud in Virginia.
Follow our blog to see our Virginia federal prosecution COVID fraud tracker:
The third and most recent sentencing for COVID-19 relief loan fraud was just last week. Joseph Cherry was sentenced for wire fraud and theft of government property on March 11, in the EDVA-Norfolk Division, to serve 51 months in the Bureau of Prisons. EDVA alleged that in March and April 2020, Cherry submitted multiple applications for PPP and EIDL loans. According to court documents, Cherry provided false information on the loan applications related to his claimed businesses, income, employment, and criminal record. As a result of these false applications, Cherry fraudulently obtained $196,900 in loan proceeds from the U.S. Treasury. In a brief period of time in April 2020, Cherry withdrew over $100,000 in the form of cash and a cashier’s check and made various purchases inconsistent with the purposes of the PPP and EIDL programs.
Recall from my earlier post, that Jaafar received 12 months incarceration in the EDVA-Alexandria Division and his wife, co-defendant, received time-served (under 3 months of incarceration). The disparity between Cherry’s sentence and that of Jaafar/Jaworska is readily explained by Cherry’s criminal history. Jaafar and Jaworska were facing a Level 17 on the U.S. Sentencing Guidelines, which recommends the imposition of 24-20 months of incarceration, whereas, Cherry was a Level 16. However, on a scale of 1-6, 6 being the worst criminal history score, Cherry was a 5. For this, he received a high-end guidelines sentence of 51 months. Cherry had been sentenced to incarceration previously; he was on probation at the time of the instant offenses; and, he had prior fraud convictions. There can be no doubt the court punished him much more severely with this history in mind. Cherry is the last of only three Federal sentencings since COVID-19 relief loan fraud was emerged a year ago.
Three additional defendants have been charged and pled guilty to pandemic relief loan fraud in EDVA. Scott Suber pled guilty to bank fraud on December 9, 2020; Didier Kindambu pled guilty to bank fraud on January 28, 2021; and, Robert Stewart pled guilty to making false statements to a government official, theft of government funds and wire fraud on Febuary 3, 2021. Bank fraud carries a maximum penalty of 30 years in prison; making false statements carries a maximum penalty of 5 years, theft of government funds carries a maximum penalty of 10 years (or not more than the greater of twice the gross gain derived by any person from the offense or twice the gross loss to a person other than the defendant resulting from the offense) and wire fraud carries a maximum penalty of 20 years.
Without going into the minutiae of the alleged schemes in each of these three cases, the high level fact relevant to sentencing is that Suber and Stewart have not agreed to any loss calculations which are central to the severity of their sentences. Kindambu has agreed to be sentenced for actual losses exceeding 1.5M, but not more than 3.5M. With Kindambu’s agreement, his recommended U.S. Sentencing Guidelines range will be no less than 46-67 months before he is given other credits e.g. 3 levels off for pleading guilty.
Until we have more data in EDVA it will be difficult to cull out a true sentencing pattern across the region. Although, on the subject of charging decisions, Jaafar and Jaworska, had the benefit of being charged under the general conspiracy against the United States code section which carries a maximum penalty of five years. Suber, Kindambu and Stewart were not so lucky in the charging decisions made by EDVA. This trio faces more serious charges carrying the potential for much higher sentences. The same was true for Cherry who pled guilty to wire fraud and theft of government property. Note, the U.S. District Court for the Western District of Virginia U.S. Attorneys Officer has reported no prosecutions of pandemic relief loan fraud.
Watch closely for up to date information. I will regularly update our COVID-19 fraud tracker and analyze any emerging patterns once these individuals are sentenced.