
Gavel on Cash Background (Getty image)
PORTLAND, Ore. (KOIN) — A notable property developer from Vancouver has received a federal prison sentence for illegally acquiring and whitewashing COVID-19 aid funds designed for the benefit of small businesses.
Details of the Fraud Case
62-year-old Michael DeFrees was handed a 21-month imprisonment verdict on Friday, coupled with a mandatory five-year supervised release period. He leveraged deceptive means while applying for the Small Business Administration’s crisis recovery initiatives.
In relation to the case, The U.S. Attorney’s Office for the District of Oregon disclosed that he lodged several applications for both the Paycheck Protection Program and the Economic Injury Disaster Loans between April 2020 and April 2022. Additionally, DeFrees submitted loan requests to two banks based in Washington state.
Falsified Ownership
The Attorney’s Office brought to light that the defendant presented himself as the sole proprietor of Gateway National Corporation, a construction firm, and the property development company known as Yacht Harbor. He further declared that he had not been charged or put under parole or probation in connection with any criminal activity.
Contrarily, authorities revealed that DeFrees was indeed on probation for fabricating business records back in 2017.
Charges and Sentence
Authorities accused DeFrees of utilizing loan money for personal expenses through a third business, implicating him as engaging in money laundering. As a result, DeFrees faced charges of bank fraud, money laundering, and two instances of wire fraud in May 2022. In October of the same year, he was found guilty on all four counts.
Ethan Knight, the Chief of the Economic Crimes Unit at the USAO, criticized DeFrees’s actions harshly, saying, “His offenses showed outright disregard for the multitude of businesses grappling with the economic impacts of the COVID-19 pandemic, not to mention American taxpayers who funded these programs intended to alleviate such hardships.”
He further emphasized, “Addressing and prosecuting COVID-19-related fraud continues to be of utmost importance to the Department of Justice and our partners.”
In addition to his conviction and recent prison sentence, DeFrees is now required to forfeit $1.2 million and offer restitution of $1.3 million to the SBA.