Five IRS employees allegedly received nearly $400,000 after fraudulently applying for more than $1.1 million in relief in government funding intended for small businesses damaged by the COVID-19 pandemic, the Department of Justice (DOJ) announced Tuesday.
The majority of the fraudulently obtained funds were spent on luxury clothing, jewelry and other personal services, but were also used by one employee to purchase a Mercedes-Benz, while another took vacations to Las Vegas, the DOJ alleged in a press release. The announcement comes less than two weeks after the Department of Labor announced that 1,000 individuals had been charged in connection with the theft of more than $45 billion in fraudulent unemployment insurance benefits extended during the COVID-19 pandemic. (RELATED: Fraudsters Stole $45 Billion In Unemployment Benefits Using Dead People, Prisoners: REPORT)
Three of the five employees operated out of Memphis, Tennessee, while the fourth and fifth were based nearby in Cordova, Tennessee, and Olive Branch, Mississippi, respectively, the DOJ reported. It is unclear from the DOJ report whether the employees collaborated or were aware of each other’s schemes.
Three of the employees, Fatina Hewitt, Roderick DeMarco White II and Tina Humes, each plead guilty to one count of wire fraud, while Courtney Quinshe Westmoreland, charged with three counts of wire fraud, and Brian Saulsberry, charged with two counts of wire fraud and two counts of money laundering, are not listed as having entered a plea by the DOJ.
Saulsberry allegedly applied for $501,000 in Economic Injury Disaster Loan (EIDL) Program funds, ultimately receiving $171,400 which he spent on a Mercedes-Benz and an investment fund, the DOJ reported. Westmoreland allegedly applied for $32,500 in EIDL and Paycheck Protection Program (PPP) funds and received $11,500, which she spent on personal services and luxuries, such as massages, manicures and clothing.
EIDL funds come in two types, COVID EIDL loans, which were 30-year loans intended to support small businesses, and EIDL Advance funds, which behaved similarly to federal grants, but only the COVID EIDL loans needed to be paid back, according to the Small Business Administration. PPP funds, meanwhile, were short-term loans intended for businesses to maintain employee retention during the pandemic, and may be forgiven if the borrower can prove they maintained employee numbers and compensation levels while spending at least 60% of the loan directly on payroll.
Each count of wire fraud comes with a maximum sentence of 20 years in prison, while each count of money laundering comes with a maximum sentence of 10 years.
Five Current or Former IRS Employees Charged with Defrauding Federal COVID-19 Relief Programshttps://t.co/EFTl8dLZbY
— Criminal Division (@DOJCrimDiv) October 4, 2022
“This matter demonstrates the brazenness with which bad actors have taken advantage of federal programs meant to help those who suffered most from the COVID-19 pandemic,” said Kevin Chambers, the administration’s Director for COVID-19 Fraud Enforcement. “The Justice Department will continue to work hard to root out PPP and EIDL Program fraud, including that committed by government employees.”
The Department of Justice did not immediately return a phone call requesting comment.
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