A woman from Lubbock, Texas was handed a 2.5-year sentence in federal prison for her role in a PPP Loan Fraud scheme, as reported on Monday by Leigha Simonton, the U.S. Attorney for the Northern District of Texas.
Papers from the court revealed that 51-year-old Hope Leticia Hastey set up a company specializing in contract services, like speech and occupational therapy.
Hastey also started Radar Foundations, a not for profit entity that coordinated community fundraising activities for individuals with cognitive impairments, along with her company, Radar Supports, as indicated by federal court records.
The company employed roughly 10 individuals while the foundation employed none, according to court documents. The records pointed out that an assumed name certificate was lodged for “Radar Supports Construction” in May 2020, specifying Hastey as the proprietor. This entity, according to court documents, did not offer any services, nor did it file a tax return.
Andrew Travis Johnson, a bookkeeper, was hired by Hastey. Johnson later admitted to perpetrating a bank fraud scheme to secure loans for Radar Supports, the foundation, and the construction company via the Paycheck Protection Program. These funds were meant to assist employers in maintaining payroll during the economic downturn driven by the pandemic.
According to officials from the U.S. Attorney’s Office, Johnson “artificially boosted payroll data.” Pero officials also noted that Hastey did not alert the authorities about the fraud, but instead contrived a facade that the money was used for payroll.
Hastey wrote a check to a coworker at Radar Supports, but deposited it into her bank account, according to court documents.
It was stated in court documents that Hastey and Johnson applied for five PPP loans and obtained almost $3.5 million.
Hastey used the loaned money for personal costs, such as buying heavy machinery to aid family members in launching a new business; purchasing a new house with cash; renovating the house; buying numerous vehicles; going on vacations; buying clothes; cosmetic and dental treatments; college tuition; and wedding costs.
Hastey was found guilty of felony misprision. U.S. District Judge James Wesley Hendrix commanded her to remunerate $3,545,894.36 as restitution.
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Frequently Asked Questions
What is PPP Loan Fraud?
PPP Loan Fraud refers to illegal activities where individuals or businesses apply for Paycheck Protection Program (PPP) loans under false pretenses. Examples of such fraudulent acts include fabricating the size of the payroll, creating fictional businesses, or falsifying the intended use of the loaned funds.
What are the penalties for PPP Loan Fraud?
The consequences for PPP Loan Fraud vary depending on the size and nature of the fraud. Penalties can range from heavy fines to multiple years in prison. Additionally, individuals or businesses found guilty would typically have to pay back the loaned funds and might face extra charges of restitution.
What measures can be taken to prevent PPP Loan Fraud?
The most effective way to prevent PPP Loan Fraud is through stringent vetting procedures during the loan application process. This includes verifying company information, checking tax returns, and digitally tracing the use of the loaned money. Fraud education and awareness are also crucial to ensure businesses fully comprehend the legality of their funding applications.
