TEXARKANA, Texas – A man and woman in Liberty County, Texas have been charged with filing hundreds of fraudulent disaster economic damage (EIDL) loan applications with the Small Business Administration (SBA) in Part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the Eastern District of Texas, Acting US Attorney Nicholas J. Ganjei announced today.
Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, allegedly operated a COVID fraud program known as ‘My Buddy Loans’, which grossed them over 700,000 dollars in fraud proceeds and resulted in losses of at least $ 1.3 million. in the USA. Pape and Jung are indicted by federal indictment that charges violations of 18 USC §§ 1349 and 2326, conspiracy to commit telemarketing fraud, victim of ten or more people over fifty-five years; 18 USC § 1343, wire fraud; and 18 USC §§ 1028A and 2, aggravated identity theft and aiding and abetting.
“We believe this investigation – to date – concerns the largest number of individual fraudulent EIDL claims associated with the CARES Act,” Acting US Attorney Nicholas Ganjei said. “We ask those with information about the My Buddy Loan fraud scheme, including those who believe they may be victims, to call the Department of Justice’s National Center for Disaster Fraud Hotline at 866 -720-5721 or file a complaint using the NCDF website. Complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form. “
“This telemarketing system has exploited those seeking help during the COVID pandemic, including many over the age of 55,” said Sharon Johnson, SBA OIG Central Region Special Agent. “We call on members of the press and the community to encourage the victims of this fraud scheme – including hundreds of residents of Texas and across the country – to file a complaint with the NCDF.”
“This case demonstrates the investigative capabilities of the United States Secret Service and should serve as a deterrent to anyone considering participating in a similar scam,” said William Mack, Resident Special Agent in charge of the Tyler Texas Resident Secret Service. Office. “This investigation highlights our exceptional partnership with the Central SBA OIG region and we will continue to work with our law enforcement partners to disrupt the criminal groups that target and victimize our communities. We thank members of the public and the banking community who have been vigilant and encourage them to continue to report any suspicious activity involving COVID relief. “
According to court documents filed in the US District Court in Texarkana, Pape and Jung operated the telemarketing system under the name My Buddy Loans. In return for a fee, My Buddy Loans took personal identifying information from the victims and promised to apply for a farm grant, which they said was available to those who owned a few acres of land. Instead, Pape and Jung actually filed fraudulent EIDL claims with the SBA that contained the victims’ personally identifiable information.
Pape and Jung used Square’s credit and debit card processing service to bill third-party charges. Pope and Jung have completed at least 700 successful charges, earning at least $ 700,000 in fees. Pape and Jung then transferred the proceeds of the fraud scheme to a bank account they controlled. On one occasion, Pape used the proceeds of fraud to pay for a traffic ticket. On another occasion, Pape and Jung used more than $ 3,600 from the fraud scheme to pay for a stay at a resort in San Antonio, Texas. A photo of this trip shows Pape and Jung celebrating around a sparkling wine. Under a warrant of seizure, officers seized the $ 505,535.04 of fraud proceeds remaining in the account.
The CARES Act is a federal law enacted in March 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One of the sources of relief under the CARES Act was the EIDL authorization or advances and low-interest loans to small businesses to meet their financial obligations and operating expenses that could have been covered if the catastrophe had not taken place. Under the EIDL program, applicants were eligible for a forgivable advance of up to $ 10,000 if the applicant had ten or more employees.
A federal indictment is just an indictment. An accused is presumed innocent until proven guilty.
Under federal law, Pape and Jung face up to 168 years in federal prison and a fine of $ 6,000,000 on sentencing. The congressional prescribed legal sentence is provided here for your information, as the sentence will be determined by the court based on advisory sentencing guidelines and other statutory factors.
This case is under investigation by the US Secret Service and the Office of the Inspector General of the SBA. The case is being continued by US Deputy Prosecutor Jonathan R. Hornok.