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Covid-aid fraud leads to 41-month sentence

Woman admits nearly $2M loan scam by Teresa Moss | March 13, 2021 at 3:36 a.m.
court gavel

A Little Rock woman was sentenced in federal court Friday to more than three years in prison and $14,000 in restitution for bank fraud after admitting to receiving nearly $2 million in loans set aside for relief to small businesses during the covid-19 pandemic.

Ganell Tubbs, 41, pleaded guilty to the bank fraud charge late last year after claiming about $1.9 million for businesses no longer in good standing through two separate loans from the Paycheck Protection Program, or PPP, according to court documents.

U.S. District Judge Brian S. Miller said during Friday's proceeding that it was difficult for him to decide on the sentencing, which could have carried up to 30 years in prison and a $1 million fine.

Tubbs filed for the loans in April and May of 2020 for two companies, Suga Girl Customs and The Little Piglet Soap Company, that she alleged to be running out of her home.

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Court documents show Tubbs' first application submitted to Celtic Bank stated Suga Girl Customs averaged monthly payroll of $607,555 for 210 employees. Another application to Cross River Bank for The Little Piglet Soap Company said she averaged a payroll of $165,750 for 36 employees.

Tubbs used funds from the loans to pay $8,000 to UAMS Student Financial Services and purchased $6,000 of items from Apple, Michael Kors, Sephora, Ugg, Nike and other businesses, the documents say.

A wire of $150,000 also was documented to a niece of Tubbs, records show. Tubbs told the niece she had won the lottery.

Business owners could apply for PPP loans after the Coronavirus Aid, Relief and Economy Security Act -- also known as the CARES Act -- was signed into law March 27. It was designed to provide emergency financial assistance to those suffering from the economic hardships related to the covid-19 epidemic.

Miller said during Friday's hearing that the government was able to find the fraud quickly and retrieved all but $14,000 of the loans.

"You start asking questions," Miller said. "Should Miss Tubbs get the benefit of the fact that government figured it out quickly?"

He also questioned why the bank gave Tubbs the money.

"If I walk into a bank and say that I need two million dollars and I have two businesses, in what world should a bank write me a check for two million dollars and make the taxpayers responsible for it," Miller said.

The banks gave the loans with little to no documentation, Miller said.

"On the other side of that equation, she walked in and defrauded them," Miller said. "It was a bad fraud but she actually went in there and did it."

The case was unusual, he said.

"I'm walking through all these different things and how did we even get here today, and it is ridiculous," Miller said.

Based on no criminal history and a quick admittance to the crime, Miller said court guidelines suggested a 41- to 51-month prison sentence and up to a $1 million in fines.

"This is one of those cases, if I didn't have the guidelines, I don't know what I'd do," Miller said. "I don't know if I'd give her more time. I don't know if I'd give her less time."

Defense attorney Molly K. Sullivan with the federal public defenders office asked the judge to give Tubbs the lower end of the guidelines because of the early acceptance and lack of criminal history.

She also asked that fines not be more than the $14,000 required because Tubbs didn't have the ability to pay back the restitution. She also asked that the defendant be sentenced to a prison in Aliceville, Ala., where she would be close to family.

Tubbs wiped away tears during the proceeding as her mother sat quietly but attentive in a row behind her.

When asked by Miller if she wanted to speak, Tubbs fought through the heavy tears to say one sentence, "I just want to apologize to my mother."

Miller continued to mention Tubbs' lack of criminal history throughout the proceeding.

"It is not like she is somebody who has been running around robbing people for the last 10 years," he said. "Three years in prison is like 20 years for some other people. Some people can go to prison and knock out those years like it is nothing. For someone like Miss Tubbs, it is really a harsh environment."

Miller recommended that Tubbs participate in a mental health counseling program during her 41-month imprisonment. He also ordered her to participate in a mental health program during a two-year supervised release.

Tubbs would be required to submit any financial documents requested, including tax returns, during the supervision, he said. She also won't be allowed to incur credit charges without prior approval.

Fifty-percent of any finances on Tubbs' books while in prison will be removed for the $14,000 restitution, Miller said. Tubbs also will pay 10% of any income made while on supervised release.

The judge recommended that Tubbs serve the sentence in Aliceville and set a date of April 26 for her to report to whatever prison she is designated.

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