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Two Ex-Jacksonville City Council Members Sentenced for Fraud and Money Laundering

pexels-photo-534204-300x167Two former Jacksonville city council members have been sentenced to federal prison for their alleged involvement in a fraud and money laundering scheme.

Katrina Brown, 40, of Jacksonville, FL, was sentenced to two years and nine months in federal prison followed by five years in a supervised release. She was also ordered to pay a forfeiture money judgment of $425,335, which are funds traceable to the alleged offenses.

Reginald Brown, 58, of Jacksonville, FL, was sentenced to 18 months in federal prison and was ordered to pay a forfeiture judgment of $411,752. Both ex-city council members were convicted on multiple charges in October 2019.

According to the purported evidence, the defendants, who are not related, are accused of skimming money for personal use from government loans and grants Katrina Brown’s family barbecue business, Basic Products, received.

In 2013, the 40-year old defendant allegedly obtained a multi-million dollar loan from the Small Business Administration (SBA) to expand Basic Products’ operations and create permanent new jobs in the city. She reportedly received a loan of $2,652,000 from the SBA and an additional loan of $380,000 and a grant of roughly $260,000 from the City of Jacksonville. As a member of the city council, the other defendant purportedly voted in favor of a city ordinance that authorized the loan and grant.

Every time she sought money for Basic Products from SBA-approved lender BizCapital, she allegedly submitted a reimbursement form that included the purported business expenses for which Basic Products sought reimbursement. Investigators claim that in late 2013, she also helped the  to incorporate two businesses that they used to submit fake invoices to BizCapital for services the businesses had not provided.

As a result, BizCapital sent several checks that are larger than $60,000 to Reginald Brown’s companies, which were reportedly headquartered at his home and his mother’s home respectively. Reginald Brown then allegedly withdrew a significant portion of the money and sent it to Katrina Brown, who either kept the cash or laundered the money by depositing it back into Basic Products’ bank account so that she could control the funds, the indictment claims.

From 2013 to 2015, Reginald Brown received $254,419 in proceeds from BizCapital and the city grant, then funneled at least $166,500 back to Basic Products, according to the indictment. He reportedly kept the remaining amount even though his companies did not do any legitimate work for Basic Products. He allegedly never filed a tax return for tax year 2014 and failed to disclose to the IRS that he had received tens of thousands of dollars in loan proceeds from the SBA.

The case against Katrina Brown and Reginald Brown was investigated by the IRS and the FBI. It was prosecuted by Assistant U.S. Attorneys Michael J. Coolican and Tysen Duva. Sources indicate that the two former city council members are seeking to be released from prison while their cases are on appeal.

Fraud and money laundering are both serious offenses that carry stiff penalties. Anyone suspected of committing white-collar crimes related to fraud in South Florida should immediately consult an experienced fraud defense attorney who can examine the evidence and determine the best course of action to minimize the possible penalties.

South Florida Fraud Defense Attorney

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

Source: 5.3.20 Two former Jacksonville city council members sentenced to federal prison for fraud.pdf

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