Date: 06-28-2024

Case Style:

United States of America v. Teldrin Foster, John Gaines, and Carla Jackson

Case Number: 1:20-cr-00296

Judge: Jean-Paul “J.P.” Boulee

Court: United States District Court for the Northern District of Georgia (Fulton County)

Plaintiff's Attorney: United States Attorney's Office in Atlanta

Defendant's Attorney:

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Description:

Atlanta, Georgia criminal defense lawyer represented the Defendant charged with engaging in a conspiracy to steal Paycheck Protection Program (PPP) funds during the COVID-19 pandemic

“Foster, Gaines, and Jackson, together with 20 other defendants who have already been sentenced for their participation in this criminal scheme, took advantage of a relief program designed to keep small businesses afloat during the COVID-19 pandemic,” said U.S. Attorney Ryan K Buchanan. “These defendants have been held accountable for depriving this program of funds desperately needed by some of the most vulnerable in our society. And their sentences send a clear message that fraud against the government will not be tolerated.”

“COVID-19 disaster relief loans were issued by the government to help businesses struggling to survive during a pandemic, not to use for personal pleasures like these defendants used them for,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “The FBI will continue to hold accountable those who abused taxpayer dollars and diverted them from citizens who desperately needed them.”

“Those who took advantage of the COVID-19 pandemic relief programs are realizing from these sentences that even after four years since Congress enacted them, they are still being held accountable,” said Demetrius Hardeman, Special Agent in Charge, IRS Criminal Investigation, Atlanta Field Office. “IRS Criminal Investigation special agents will continue investigating and forwarding for prosecution to the U.S. Attorney’s Office those who committed fraud against the government.”

According to U.S. Attorney Buchanan, the second superseding indictment, and other information presented in court: From April 2020 through August 2020, Foster worked with co-defendant Darrell Thomas and others to fraudulently obtain at least 14 fraudulent loans. Each of the 14 businesses obtained a PPP loan between $700,000 and $850,000, for a total of over $11 million. The loan applications certified that: each applicant’s business was in operation on February 15, 2020, and had employees for whom it paid salaries and payroll taxes or paid independent contractors; the funds would be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments; and the information provided in the application and in all supporting documents and forms was true and accurate in all material respects.

The PPP loan applications reported that each business maintained between 59 and 69 employees and generated approximately $295,000 to $342,000 in average monthly payroll expenses. To support these payroll figures, each business’s loan application was accompanied by an Internal Revenue Service Form 941, which employers use to report quarterly payroll taxes, for each quarter of 2019 and by a bank statement or a spreadsheet reflecting payroll expenses. In fact, none of the businesses had employees or incurred payroll expenses. The Form 941s, bank statements, and W2 payroll spreadsheets were all fabricated. Some of the supporting documents the businesses submitted were substantively identical, including the Form 941s, bank statements, and W2 payroll spreadsheets – where the reported figures were identical but purported employee names had been changed.

Gaines worked with co-defendant Thomas and others to obtain a fraudulent PPP loan in the amount of $806,710, for a Georgia business called Gaines Reservation and Travel. But that business had no employees or payroll expenses. To support the fraudulent PPP loan application, Gaines provided Thomas with fabricated bank statements for Gaines Reservation and Travel that reflected fake payroll deductions. After the PPP loan was approved, the funds were deposited into an account controlled by Gaines. Gaines later directed payments to Thomas that were disguised as payments for rent and payroll, which are approved expenses under the PPP.

Jackson laundered some of the proceeds of Gaines Reservation and Travel’s PPP loan, receiving over $300,000 of the stolen PPP funds into her business’s bank account. The funds were transferred via a check in the amount of $155,252.50 and a wire transfer in the amount of $179,985.72. The check falsely claimed that the funds were provided to Jackson as consulting fees and daily business management, and the wire transfer documentation falsely stated that the funds were for payroll services. In actuality, Jackson was assisting Gaines in concealing the stolen PPP funds from detection and seizure by federal law enforcement.

Outcome: U.S. District Judge Jean-Paul “J.P.” Boulee sentenced the defendants as follows:

Teldrin Foster, 42, of Atlanta, Georgia, was sentenced to 10 years and one month in prison, to be followed by three years of supervised release. He was also ordered to pay restitution in the amount of $9,606,627. On February 15, 2024, he was convicted by a jury of six counts of conspiracy to commit bank fraud and wire fraud, eight counts of conspiracy to commit wire fraud, six counts of bank fraud, fourteen counts of wire fraud, six counts of making false statements to a federally insured financial institution, and one count of money laundering.

John Gaines, 59, of Marietta, Georgia, was sentenced to five years and three months in prison, to be followed by three years of supervised release. He was also ordered to pay restitution in the amount of $806,710. On January 31, 2024, he pleaded guilty to one count of money laundering.

Carla Jackson, 56, of Tucker, Georgia, was sentenced to three years in prison, to be followed by two years of supervised release. She was also ordered to pay restitution in the amount of $335,238. On February 15, 2024, she was convicted by a jury of two counts of money laundering.

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