FLORENCE, SOUTH CAROLINA — Three defendants – all of whom were U.S. Postal Service employees during this alleged fraud scheme – have been charged in the District of South Carolina for their alleged roles in a fraud scheme related to the Coronavirus Aid, Relief, and Economic Security Act’s Paycheck Protection Program (PPP).
The scheme involved as many as 400 fraudulent PPP loan applications, the majority of which were for applicants in South Carolina. The indictment alleges the scheme resulted in more than $1 million in fraudulently obtained PPP loans, and according to evidence presented at the defendants’ bond hearing, that figure may be as high as $8 million.
The indicted defendants are:
The indictment alleges that the defendants were part of a national scheme, led by McFadden, that fraudulently acquired PPP loans. The PPP loan program was administered by the Small Business Administration (SBA) and provided forgivable loans to small businesses for job retention and certain other expenses during, and resulting from, the COVID-19 pandemic.
McFadden, according to the indictment, created false and fraudulent PPP loan applications by obtaining the personal identifying information (PII) of putative PPP loan applicants. She used that information to create tax documents and other paperwork related to non-existent businesses. McFadden then submitted that information to SBA-approved lenders, and the loan recipients received PPP loans they were not entitled to. In exchange for her services, McFadden would receive a portion of the funds. The indictment alleges that McFadden would also assist in getting the loans forgiven through the SBA.
Cherry Lewis and Keisha Lewis, as alleged in the indictment, assisted McFadden in the scheme. They requested and received blank and fillable tax forms from McFadden, which they used to assist others in completing fraudulent PPP loan applications. The indictment further alleges that both Cherry Lewis and Keisha Lewis also personally obtained at least one fraudulently obtained PPP loan.
The defendants were arrested by the U.S. Secret Service on January 6, 2023. That same day, they were arraigned before U.S. Magistrate Judge Kaymani D. West at the federal courthouse in Florence, South Carolina, and released on bond pending trial.
“Any member of the public who has information related to this scheme is encouraged to contact the U.S. Secret Service,” said U.S. Attorney Adair F. Boroughs. “PPP loans were intended to help businesses survive unprecedented challenges. Every dollar stolen from this program was stolen from taxpayers and legitimate businesses in need of support. This office takes pandemic-related crime seriously and stands ready to prosecute such fraud in all its forms.”
Any member of the public who has information related to this scheme is encouraged to contact the Columbia, South Carolina, field office of the U.S. Secret Service at 803-772-4015.
Each defendant faces a maximum penalty of 20 years in prison, fines, and restitution.
The case was investigated by the U.S. Secret Service, with assistance from the U.S. Postal Inspection Service, the Small Business Administration, the Florence County Sheriff’s Office, and the Williamsburg County Sheriff’s Office. Assistant U.S. Attorneys Elliott B. Daniels and Winston Marosek, who also serves as the Office’s Coronavirus Fraud Coordinator, are prosecuting the case. A copy of the indictment is attached.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
U.S. Attorney Boroughs stated that all charges in the indictment are merely accusations and that defendants are presumed innocent unless and until proven guilty.
