Maryland Resident Pleads Guilty in Multi-Million Dollar COVID-Relief Fraud Scheme

A resident of Hyattsville, Maryland, has pleaded guilty to federal charges in connection with a scheme that defrauded the Paycheck Protection Program (PPP) of more than $2.3 million. Carmen Hernandez, 49, admitted to her role in the conspiracy to commit wire fraud as part of a broader effort by the government to combat fraud within federal relief programs. This prosecution is being highlighted as part of a national initiative aimed at eliminating fraud in such programs.

According to information presented in federal court, Hernandez and her co-conspirators established a tax-preparation business, Integrated Multi Services Inc. (IMS), in Silver Spring, Maryland, in 2014, which was registered under her name. The scheme to fraudulently obtain PPP loans, administered by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, reportedly ran from May 2020 until at least May 2023. The PPP was designed to provide emergency financial assistance to businesses impacted by the COVID-19 pandemic, with loan proceeds intended for payroll, rent, mortgage interest, and utilities.

The fraudulent activities involved soliciting clients from IMS and others to utilize the business’s services for PPP loan applications. Hernandez allegedly guided applicants on the necessary documentation for their submissions. Court documents indicate that a co-conspirator was responsible for submitting applications containing false information and fabricated supporting documents, such as tax records and business statements, to inflate loan amounts. In some instances, businesses listed on these applications were reportedly non-existent. Hernandez and her associates are accused of charging borrowers a percentage of the received loan funds as kickbacks.

Collectively, Hernandez and her co-conspirators are linked to the submission of at least 120 fraudulent PPP loan applications on behalf of at least 80 borrowers, resulting in approximately $2.3 million in illicitly obtained funds. Furthermore, Hernandez admitted to submitting two false PPP loan applications for herself, which resulted in her personally receiving $37,224 in funds to which she was not entitled. These applications, submitted in June 2020 and March 2021, reportedly contained significant misrepresentations and were supported by fabricated tax documents. Hernandez faces a maximum penalty of 20 years in federal prison for the conspiracy to commit wire fraud conviction. Federal sentencing decisions are determined by a judge after considering sentencing guidelines and other legal factors.

The Department of Justice has established a National Fraud Enforcement Division to investigate and prosecute individuals involved in fraudulent activities against the public. This division’s work supports efforts to eliminate fraud, waste, and abuse within federal benefit programs. The U.S. Attorney’s Office for the District of Maryland has provided resources for reporting fraud on its website.

Article by Mel Anara, based upon information from the U.S. Attorney’s Office, District of Maryland

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