Redmond man pleads guilty to defrauding U.S. of $600K in PPP loans
SEATTLE - A 62-year-old Redmond man pleaded guilty Thursday to conspiring to defraud the COVID-19 Paycheck Protection Program (PPP) of more than $600,000.
The U.S. Attorney's Office said Joseph Freeman used the names of two companies he registered to get PPP loans to protect the salaries of employees he did not actually have. PPP loans are forgivable, meaning Freeman could nab the federal funds and then never be required to pay them back.
According to court documents, Freeman and other co-conspirators submitted their first fake application in May 2020, claiming the company they founded in 2004—Special Delivery LLC—had 15 employees on a payroll of $200,000 per month. In reality, prosecutors say Freeman was the only employee. The conspirators requested $500,000 in PPP funds, which were wired to Freeman's account.
In June 2020, they submitted a second application, this time claiming their company New Jack Trucking LLC had 10 employees and a monthly payroll of $58,400. The conspirators claimed their business had been in operation since Feb. 2020, though it never actually had any business activity. Freeman and the co-conspirators received $146,000 for their application.
In both instances, prosecutors say they falsified Internal Revenue Service (IRS) forms and bank statements to make it seem like their companies had employees.
Once federal investigators detected the fraud, they froze the remaining $220,000 left in Freeman's bank account and returned it to the Small Business Administration.
According to the U.S. Attorney's Office, conspiracy to commit theft of government funds is punishable up to five years in prison and either a fine of $250,000 or twice the gross monetary gain to the defendant, or the gross monetary loss to the victims.
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Prosecutors are pursuing no more than two years in prison for Freeman.