Couple Charged With Fraudulently Obtaining COVID-19 Relief Funds
A Liberty County couple has been charged in federal court with filing hundreds of fraudulent loan applications to obtain funds from the EIDL relief program authorized by the CARES Act. Clifton Pape, 45, and Sally Jung, 58, of Cleveland, Texas, are alleged to have operated a scheme called My Buddy Loans to fraudulently obtained COVID-19 relief funds.
Pape and Jung have been charged with violation of 18 U.S.C. § 1031, committing a major fraud against the United States. The couple is believed to have personally received over $775,000 in proceeds and cost the U.S. government over $1.3 million in losses.
U.S. Attorney Stephen J. Cox of the Eastern District of Texas, in bringing the charges against the couple on January 13, 2021, noted that the couple stands accused of taking advantage of the public and depleting resources intended to help small businesses through the difficulties caused by the COVID-19 pandemic, all in an attempt to personally enrich themselves. Prosecutors note that with the second round of CARES Act relief currently being distributed, CARES Act application fraud remains a priority for investigators and prosecutors.
According to documents filed in the U.S. District Court for the Eastern District of Texas, Pape and Jung are alleged to have operated under the name My Buddy Loans. The company purported, for a fee of approximately $1000, to take personally-identifying information of third parties to file applications for $10,000 federal agricultural grants. However, Pape and Jung are alleged to have taken the information to file false EIDL applications.
The complaint accuses the couple of filing 222 EIDL applications during June and July 2020, with each application purporting to be on behalf of a business employing ten individuals, the minimum number of employees needed under the EIDL program to obtain the maximum advance of $10,000. The SBA issued 130 advances of $10,000 to Pape and Jung, totaling $1.3 million. Pape and Jung also stand accused of generating over $775,000 in fees they charged third parties for their fraudulent services.
U.S. attorneys allege that Pape and Jung transferred the proceeds of their scheme into bank accounts controlled by them, using the funds to pay for personal expenses such as satisfying the fine on a traffic ticket and purchasing a vacation resort stay. Federal investigators who ultimately seized the couple’s account found only a little more than $500,000 in fraud proceeds remaining in the account.
If convicted, Pape and Jung face a possible maximum sentence of 10 years in federal prison and a fine of up to $5 million.
Contact an Experienced Criminal Defense Attorney
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Contact Rosenthal Kalabus & Therrian today by calling us at (972) 369-0577 or filling out the contact form on our website for an initial consultation to speak with a knowledgeable criminal defense attorney about the details of your case. Learn more about how a dedicated lawyer can help you protect your freedom and your future.