A Tennessee man pleaded guilty on May 1 in federal court to wire fraud after receiving a CARES Act loan for a non-profit organization that had no revenue or employees.
Paul Eugene Welborn Jr., 67, of Mountain City, Tennessee, admitted guilt for misrepresenting financial details about his non-profit, Wings of Hope, on an application for a federal COVID-19 relief loan. The case was heard in Abingdon, Virginia.
The Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted in March 2020 to provide emergency financial assistance during the pandemic. The act allowed the Small Business Administration to offer loans up to $2 million and advances up to $10,000 for eligible small businesses facing revenue loss due to COVID-19. According to court documents, when Welborn applied for the loan in 2020, Wings of Hope had little or no income or expenses and no employees. However, he claimed it had $2 million in gross revenue and more than twelve employees on his application paperwork.
As a result of these false statements, Wings of Hope received a $159,900 Economic Injury Disaster Loan from the SBA on June 9, 2020. Welborn used the funds for personal purchases at various retailers and transferred money between personal bank accounts.
First Assistant United States Attorney Robert N. Tracci and Kareem A. Carter from IRS Criminal Investigation announced the plea agreement. The Internal Revenue Service-Criminal Investigations and Department of Labor Office of Inspector General investigated the case while Assistant U.S. Attorney Whit Pierce is prosecuting it.
The U.S. Attorney for the Western District of Virginia promotes public safety through crime prevention initiatives with offices located in Roanoke, Charlottesville, Abingdon, Lynchburg, Danville and Harrisonburg according to its official website. The office is part of the U.S. Department of Justice and covers western Virginia where it handles federal prosecutions as well as civil litigation while partnering with law enforcement agencies at multiple levels according to its official website.
In April this year, the Department of Justice created a Fraud Division focused on investigating those who commit fraud against federal benefit programs.
