Three Tulsa-area residents have been sentenced in connection with federal Paycheck Protection Program loan schemes.
In one case, a husband and wife were sentenced to federal prison and ordered to repay $743,776.98 in restitution to the Small Business Administration.
William Mark Sullivan, 50, and Michelle Cadman-Sullivan, 43, were sentenced to respective prison terms of three years and two years in prison after pleading guilty in June 2022 to conspiracy to commit bank fraud. The couple will also be required to serve five years of supervised release.
In another case, Ladawn Shazzelle Pinkney was sentenced to six months in prison followed by six months of home confinement after pleading guilty earlier to wire fraud.
Pinkney was also ordered to repay the Small Business Administration $41,828.46 in restitution.
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“All three of these individuals repeatedly lied to banks to obtain government funds intended to retain employees at legitimate businesses during the height of the COVID-19 pandemic,” said U.S. Attorney Clint Johnson. “My office will continue to hold fraudsters accountable for misusing federal emergency assistance.”
The Sullivans admitted in their plea agreements to seeking $2.7 million in PPP loans from Arvest Bank and Exchange Bank by submitting false W2s, false tax reports and other false information in six applications.
The couple admitted transferring the SBA loan proceeds through various bank accounts and using the funds for personal use.
The indictment alleged that the Sullivans misrepresented the number of businesses they owned and operated, the duration of operation for each business and how the loan proceeds would be used.
The two used the following business names when applying for PPP loans: Oklahoma Paving, USA-1 Construction, U.S. Central Construction and Oklahoma Energy, according to the U.S. Attorney’s Office.
Pinkney admitted in July that she submitted two PPP loan applications for businesses that did not exist prior to the COVID-19 pandemic.
In her application for loan forgiveness, Pinkney falsely stated that she used the loan proceeds for payroll and other eligible uses of PPP loan proceeds, according to the U.S. Attorney’s Office.
“Conspiring to fraudulently obtain federal funds that are meant to provide assistance to nation’s small businesses is unacceptable,” said SBA Office of Inspector General’s Central Region Special Agent-in-Charge Brady Ipock. “These sentences demonstrate that those responsible will be held accountable. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their support and dedication to pursuing justice in this case.”
In June an SBA Office of Inspector General review of pandemic loan assistance programs found that the agency disbursed about $1.2 trillion of COVID-19 Economic Injury Disaster Loan and Paycheck Protection Program funds.
The office found that the SBA, in a rush to swiftly disburse funds, weakened or removed controls necessary to prevent fraud.
The review determined that fraud accounted for at least $200 billion, or 17%, of all COVID-19 Economic Injury Disaster Loan and Paycheck Protection Program funds disbursed by the agency.
The SBA has seen about $30 billion in fraudulently gained loan proceeds seized or returned, according to the June report.