Two men plead guilty of massive SBA pandemic loan fraud, Bragg says

 May 18, 2023

Two men pleaded guilty to taking hundreds of thousands of dollars in fraudulent loans from the Small Business Administration during the pandemic, according to Manhattan District Attorney Alvin Bragg.

William Felcon, 66, and his nephew Thomas Felcon, 42, were sentenced to pay back the loan money plus additional expenses, along with community service.

The announcement

“While New York businesses were in dire need of financial support during the pandemic, William and Thomas Felcon defrauded the system and obtained loans from the U.S. Small Business Administration by lying on their applications,” Bragg said.

“We will not allow public programs to be raided and used as a personal piggy bank for greedy individuals and companies.”

The details

"Both defendants made false statements in numerous loan applications regarding the companies’ number of employees, payroll amounts and intended use of the loan proceeds to the PPP and EIDL programs," the news release from the district attorney's office explained.

"The loan programs were designed to assist businesses with retaining employees during the pandemic emergency, but none of the companies had employees or payroll expenses at all relevant times of the scheme," it added.

"In total, the firms received more than $600,000 in PPP loans from several different private lenders and received loan advances and more than $1,000,000 Economic Injury Disaster Loan funds for which they were not eligible," the New York Daily Times reported.

"Bragg said the companies created fraudulent IRS reporting forms that falsely inflated the number of employees and the amounts of wages and payroll taxes," it added.

The case is one of the larger examples of pandemic loan fraud to make it through the courts. Many have expressed concern over how the two men were able to obtain the funding despite not having employees.

In another case, a New York woman was sentenced for $9.2 million in loan fraud as part of a separate scandal.

The examples show how some employers used the restrictions during the pandemic to find loopholes for financial gain during a time when many Americans were struggling under closures during COVID-19 restrictions.

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