A Mountain Home man was sentenced Monday to 63 months in prison after pleading guilty in March to his abuse of various covid-19 economic relief programs.
James Read, 45, falsified documents to apply for Small Business Administration loans intended for businesses struggling during the pandemic, according to a news release from the U.S. attorney's office in Fort Smith.
"Read also filed for Pandemic Unemployment Assistance, on behalf of himself and others, in multiple states despite being ineligible for the funds," according to the release. "The Court ordered Read to pay $277,827 in restitution for the fraudulently obtained funds."
According to a plea agreement filed in federal court on March 17, Read "agrees to waive Indictment by a grand jury, and consents to the filing of an Information charging the Defendant with False Statement, in violation of 18 U.S.C. § 1001(a)(3), Money Laundering, in violation of 18 U.S.C. § 1957, and Wire Fraud, in violation of 18 U.S.C. § 1343. The Defendant further agrees to plead guilty to the Information."
Read applied to the Small Business Administration for Payment Protection Program funds claiming that he owned 100% of a business called Snowbirdbob LLC with an average monthly payroll of $22,308, according to the plea agreement.
"Along with the application, Read submitted a falsified IRS Schedule C (Profit or Loss From Business), which represented that Snowbirdbob LLC had $1.2 million in gross sales in 2019 and a net profit of $267,700," according to the plea agreement.
Under the Coronavirus Aid, Relief, and Economic Security Act, the Payment Protection Program provided forgivable loans intended for businesses struggling with essential expenses, such as payroll, during the pandemic.
On Dec. 11, federal agents interviewed Read, who acknowledged that he falsified the numbers on his loan application and made up the numbers on his Schedule C, according to the plea agreement.
Read's loan application had been approved, and $55,770 was wired to his bank account on June 29, 2020.
Shortly after receiving the loan, Read bought a 2017 GMC Sierra truck from Lake View Auto Sales in Mountain Home, according to the plea agreement. The total price of the vehicle was $34,900. Read obtained a cashier's check for $26,000 and got credit for a trade-in vehicle.
That resulted in the charge of money laundering, according to the court filing.
"Read knowingly engaged in a monetary transaction by, through, and to a financial institution, affecting interstate commerce, in criminally derived property of a value greater than $10,000, when he purchased a 2017 GMC truck ... using money that was the proceeds of a scheme to defraud the SBA by submitting a PPP loan application that contained false and fraudulent information," according to the plea agreement.
Read committed wire fraud when he applied for Pandemic Unemployment Assistance in Arkansas, Missouri and Louisiana, according to the plea agreement. He received a wire transfer of funds based on his false claim that he lived in West Monroe, La.
Read's wife, Crystal Payne, 43, was sentenced Monday to five years of probation, a $5,000 fine and ordered to pay $59,130 in restitution for her role.
She pleaded guilty in March to one count of making a false statement in violation of 18 U.S.C. § 1001(a)(3).
According to Payne's plea agreement, also filed March 17, she submitted an online application for a Payment Protection Program loan to a Seattle bank, claiming she owned 100% of a business called "B Bird Stitching."
She claimed the business had a monthly payroll of $53,642.
When questioned on Dec. 11, Payne told investigators that B Bird Stitching "hadn't really made any money yet" and "hasn't really gotten going."
According to the plea agreement, Payne also falsified an IRS Schedule C saying B Bird Stitching had 2019 gross sales of $1.2 million and net profit of $643,700.
"This couple executed a scheme to steal money that was intended to help those who were truly in need," said acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas.
Fowlkes said he hoped the sentence "sends a clear message" to others contemplating similar fraud.
"Our agents will continue to pursue fake business owners such as Mr. Read aka 'Snowbird Bob', who chose to steal funds intended for small business owners crippled by this global pandemic," said Christopher Artemis, special agent in charge with the Internal Revenue Service Criminal Investigations division of the Internal Revenue Service.
"In a time of national turmoil and uncertainty, Mr. Read flagrantly defrauded programs intended to assist Americans and their businesses," said James Dawson, special agent in charge with the FBI in Little Rock.