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North Carolina Man Accused of Committing COVID-19 Relief Fraud after Receiving $400K in Loans

tiffany-tertipes-Y2Vxsb75RVo-unsplash-300x200The U.S. Attorney’s Office for the Middle District of North Carolina has announced charges against a Trinity man accused of fraudulently seeking more than $410,000 in loans from federal coronavirus (COVID-19) relief programs meant to help businesses impacted by the pandemic.

David Christopher Redfern, 31, was charged with one count of wire fraud and one count of bank fraud. It is unclear if he has acquired the services of an attorney.

According to the criminal complaint, the accused is the owner of Wilder Effects, which was first registered in January 2020. In April and June of this year, he allegedly applied for two loans from the Economic Injury Disaster Loan (EIDL) program and one loan from the Paycheck Protection Program (PPP) to cover payroll expenses. The complaint claims he provided falsified documents to support his loan applications, such as a fake Internal Revenue Service (IRS) filing of Wilder Effects’ tax returns for the first quarter of 2020 that showed the company had 20 employees on payroll.

The PPP and the EIDL are federal COVID-19 relief programs authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed by Congress in March 2020. The loans, which are serviced by banks and credit unions and guaranteed by the Small Business Administration (SBA), are meant to provide emergency financial assistance to American businesses struggling with the economic effects of the coronavirus pandemic.

Both of the defendant’s loans were approved and funded. The complaint alleges that he transferred the loan proceeds from Wilder Effects’ bank account to his own personal bank account, which set off a series of fraud alerts. As a result of the alerts, the company’s bank account was frozen and the bank was able to recover $402,000 of the over $414,000 in loan proceeds the company had received. It is unclear if the defendant intended to use the funds for operational expenses.

The primary purpose of PPP loans is to cover payroll. Qualifying businesses can borrow up to $10 million in loans that are 100% forgivable if they don’t lay off any employees or if they rehire employees who have already been laid off. The EIDL program is similar to the PPP, but qualifying businesses can only borrow up to $2 million in loans. Like the PPP, EIDL proceeds can only be used to cover business-related expenses.

Business owners can apply for both the PPP and the EIDL, but the funds can’t be used for the same expenses. Congress has authorized over $650 billion in loans for small businesses to cover employee salaries, rent and utilities, mortgage interest, and interest on debt incurred before February 2020.

Anyone suspected of committing fraud related to federal COVID-19 relief programs should immediately consult an experienced fraud defense attorney. A good attorney can conduct an independent investigation and figure out the best course of action to minimize the potential penalties or have the charges dropped.

South Florida Fraud Defense Attorney

Are you accused of committing fraud in South Florida involving federal COVID-19 relief programs? Contact Brian Silber, P.A. to set up a free initial consultation with one of South Florida’s most experienced fraud defense attorneys.

Source: 8.25.20 North Carolina man charged with COVID-19 relief fraud.pdf

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