Scammers took advantage of pandemic to cash in on taxpayer money
ST. LOUIS (KMOV) -- Luxury cars, spending sprees and cash money; it all came easily to scammers during the pandemic.
Now, the government is cracking down on people who stole billions of tax dollars intended to help those hurt financially by Covid. But some are asking if the government was partly to blame as well.
One business that received close to $400,000 in funding is a janitorial company called Star Shyne. It’s listed address is for a place called “Wing Strip” in Florissant, which is not open for business.
It was part of the Payroll Protection Program or PPP.
Launched at the beginning of the pandemic, businesses could apply for forgivable loans, government funds to keep employees on staff instead of furloughing or letting them go.
“I believe in the value of the PPP program, but it was always going to be a problem, it just was,” says Gwendolyn Carroll. She is a career federal fraud prosecutor in St. louis.
“When you release many, many billions of dollars in the economy with almost no restrictions, people take advantage of it and so that’s where my office comes in,” she says.
The government estimates around $100 billion went to people who didn’t deserve it.
“These are all taxpayer dollars, this money being defrauded. This is money I am paying, my neighbor is paying, everyone in society that is doing the right thing and complying with the law, they are being taken advantage of,” Carroll says.
Locally, she says there are more than 45 investigations into PPP or other Covid-19 related government fraud.
She declined to talk about most of them: “because we have obligations of secrecy during pending investigations, there is only so much we can talk about.”
But she can talk about some people, like Robert Williams, because she has already worked to send to them prison.
“Williams is serving a sentence he richly earned,” Carroll says.
Williams, a formerly convicted felon for identity theft, suddenly became a millionaire during the COVID-19 pandemic after collecting $1.5 million in fraudulent PPP funds.
He even recruited others to get in on the easy cash. But he left an easy trail for the government, buying a Jaguar sports car and even a Maserati with the money.
The government has seized the cars and other assets. When Williams gets out of prison in 10 years, he’ll still be working to pay off his debt to society.
Many others are still awaiting their day in court, like Christopher Lee Carroll and George Reed.
Carroll and Reed are the heads of Square One Group, a timeshare exit company based in Des Peres, are accused of a scheme to take nearly $3 million in PPP funds.
Instead of using it to pay employees, they furloughed workers anyway, according to the indictment, and used the money to buy dozens of trucks and trailers for an entirely new business. Both men have pleaded not guilty.
But the indictment also notes Carroll is a registered sex offender out on parole at the time of the application for PPP funds. Carroll’s attorney argues that’s irrelevant, because later revisions to PPP law removed requirements about felony and/or status.
News 4′s research located dozens of people charged with PPP fraud all around the country.
Recently, the actor who played the Red Power ranger on a popular kids show was indicted.
Locally, News 4 found one man charged who said he ran a restaurant and fine dining business with employees in Wentzville, but the listed address was actually a UPS store.
Federal fraud prosecutor Gwen Carroll, though, says some people did get creative, even falsifying documents like W-2s.
“People like money for nothing and this was another way to get money for nothing,” she says.
She tells News 4 it’s often family members or neighbors turning people into the FBI.
“If someone showed up with a new car or put an in-ground pool into their home, it is worth it to you to call and let the people in law enforcement know what you’ve seen,” Gwen Carroll said.
But defense attorney Joel Schwartz says with almost no upfront vetting and normal loan underwriting suspended, it was just too easy for people to take money.
“It would be akin to putting a child, an infant, with a bunch of popsicles and ice cream and saying ‘don’t touch it.’ It was that easy,” he says.
Williams was one of his clients. He expressed remorse, Schwartz says, and knew he’d probably get caught. The taxpayer, however, probably won’t see most of the money ever again, Schwartz claims.
“I do hope the government has learned that there needs to be some oversight,” he says.
News 4 went to the listed address for Star Shyne in Florissant last year, expecting to find the janitorial company. The high loan amount, plus the lender the owners used, plus the papered-over windows of a chicken restaurant all raised some questions.
Michael Smith, an associate of the business, said the owners didn’t want to go on camera. Still, he says their PPP money did go to good use.
“It helped us stay open and achieve what we were doing. We are doing construction in here and it’s been a blessing,” Smith says.
Want to contact authorities about a business that seems a little suspect to you? Click here.
In the meantime, there are several charged fraud cases in our area- and News 4 will continue to track them.
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