National Takedown Uncovers Over $245 Million in COVID-era Loan Fraud, Including Morgantown, WV Business Owners

The Northern District of West Virginia is participating in a significant nationwide effort by the Department of Justice’s National Fraud Enforcement Division, in conjunction with the Small Business Administration (SBA) and its Office of Inspector General, to combat fraud related to COVID-19 pandemic relief programs. This coordinated surge, which ran from June 12 to September 1, encompassed actions across 40 U.S. Attorney’s Offices and involved over 20 federal and state investigative agencies. The enforcement actions have targeted more than 160 criminal defendants, leading to approximately 80 new charges and aiming to recover funds totaling roughly $245 million in intended losses to taxpayers.

The focus of this initiative has been on individuals who allegedly exploited programs like the Paycheck Protection Program (PPP), designed to support businesses during the economic downturn caused by the pandemic. Prosecutors have indicated that defendants are accused of fabricating businesses, submitting false information regarding payroll and revenue, using stolen identities, and concealing foreign affiliations in their loan applications. The U.S. Attorney’s Office for the Northern District of West Virginia has stated its commitment to prosecuting those who misuse federal funds and defraud the United States government.

Among those facing charges are two business owners from Morgantown, West Virginia. James Baldwin II, owner of Select Decks, was sentenced to 30 days in federal prison and ordered to pay over $1 million in restitution. Baldwin was found to have applied for and received multiple PPP loans for his business and three other entities that were not operational before the pandemic. He allegedly falsified documents to secure approximately $738,230 in PPP loans from various financial institutions and subsequently obtained loan forgiveness from the SBA. In addition to the loan fraud, Baldwin is accused of failing to remit $258,993 in payroll taxes to the IRS for his business, Select Decks, despite withholding these funds from his employees.

In a separate case, Kurt Ly, owner of Vin Phat, Inc., also in Morgantown, has admitted to a scheme involving fraud against federal pandemic relief programs. Ly is alleged to have obtained PPP loans and then used the funds for personal expenses rather than permissible business purposes. He further sought loan forgiveness from the SBA by falsely certifying that the money was used appropriately for his business. Ly also received an Economic Injury Disaster Loan (EIDL) of $146,600, which he certified would be used solely for working capital. However, investigations revealed that these funds were instead used for significant personal expenditures, including the purchase of a vehicle, cryptocurrency investments, and transfers to his personal bank account. The PPP was established under the CARES Act to assist small businesses with payroll and essential expenses during the COVID-19 pandemic. Applicants were required to provide accurate information, verify their identities, and certify that loan funds would be used for authorized business expenses. Those seeking loan forgiveness also had to swear under penalty of perjury that the funds were spent on eligible costs like payroll, rent, or utilities.

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

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