From staff reports OKLAHOMA CITY – The federal government continues to “claw back” money stolen in fraudulent loans that were inadvertently approved during the height of the coronavirus pandemic.
In two recent cases, an Oklahoma City woman and a Broken Arrow man both have pleaded guilty to federal wire fraud charges arising from COVID-19 business loans.
Madinah Malikah Montgomery, 32, of Oklahoma City, claimed in July 2020 to be the owner of a hair and nail salon business located in Oklahoma City. During this time, in response to the COVID-19 outbreak, the Small Business Administration temporarily expanded its Economic Injury Disaster Loan program to help small businesses overcome economic hardships brought on by the pandemic.
Montgomery pleaded guilty April 3 to wire fraud in an EIDL application that was submitted to the SBA on behalf of her business.
Prosecutors alleged Montgomery “knowingly and willfully devised … a scheme and artifice to defraud the SBA, and to obtain money and property from the SBA by means of materially false and fraudulent pretenses and representations” she made in her EIDL application.
She admitted she lied on the loan application when she wrote that her business had 10 employees and $600,000 in gross revenue over the previous 12 months.
Montgomery received $149,900 as a result of the fraudulent application, and admitted that part of the loan money she received was improperly spent on personal expenses. In all, Montgomery received $300,000 from the SBA following her fraudulent EIDL applications.
At sentencing, she faces up to 20 years in federal prison and a fine of up to $250,000. Her plea agreement states that restitution will be mandatory.
In Tulsa’s federal district court, Malcolm Andre Jones, 32, of Broken Arrow, admitted submitting a false and fraudulent Paycheck Protection Program loan application – and then lied repeatedly during his presentence investigation.
Jones’ application to the Small Business Association stated that he owned a landscaping business and that all loan proceeds would be used for that business; however, Jones did not own a landscaping business. He admitted using the funds to pay bills and buy a couch and an automobile. Jones used the funds and then had them forgiven, in accordance with the PPP program.
After pleading guilty and while being on pretrial bond, Jones lied to probation officers, the government, and his attorney about significant matters during the presentence investigation.
Jones submitted a forged college diploma, claiming he received a master’s degree in college. He stated that he was undergoing chemotherapy for kidney cancer and had more than $500k in debt.
Jones went so far as lying about serving in the military. In court filings, he described deployments in detail and claimed he suffered from PTSD because a friend supposedly died in front of him. He presented fake military paperwork claiming he had been honorably discharged and received a Medal of Honor and Purple Heart, despite not having served in the military at all.
U.S. District Judge Gregory K. Frizzell sentenced Jones on March 29 to 27 months in federal prison – which has no parole – followed by three years of supervised release, for wire fraud. Frizzell further ordered Jones to pay $20,665 in restitution.
Jones was permitted to remain on bond and voluntarily surrender to the U.S. Bureau of Prisons.