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Date: 06-09-2023
Case Style:
Case Number: 2:23-cr-00238
Judge: Joan M. Azrack
Court: United States District Court for the Eastern District of New York (Nassu County)
Plaintiff's Attorney: United States Attorney’s Office in Central Islip
Defendant's Attorney:
Description: Central Islip, New York criminal defense lawyer represented Defendant charged with conspiracy to commit wire fraud.
Arthur Cornwall, a signal maintainer with the New York City Transit Authority, and Sean Williams, a New York State Court Officer, pleaded guilty to conspiring to commit wire fraud in connection with their receipt of approximately $770,000 in small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP).
“The abuse of disaster relief programs is a serious crime, and it is reprehensible that two civil servants would blatantly steal from these programs for small businesses and families struggling during the pandemic,” stated United States Attorney Peace. “The defendants are being held accountable. This case should serve as a reminder that while the worst days of the pandemic are in the past, law enforcement has a long memory for those who defrauded those relief programs.”
Inspector in Charge of the New York Division Daniel B. Brubaker said: “The government response to the COVID-19 Pandemic was unprecedented in its scope to help those who desperately needed government assistance in an extraordinary time in our nation’s history. These civil servants schemed and defrauded the public, in violation of their sworn oaths, by stealing money that should have gone to support our communities and not to fund their lifestyles. Postal Inspectors and our partners in the U.S. Attorney’s Office are committed to vigorously investigating and pursuing such offenders in order to maintain the integrity of and public confidence in disaster relief programs. Today’s guilty pleas are the result of this commitment.”
As set forth in court filings, between May 2020 and July 2020, amid the COVID-19 pandemic, Cornwall and Williams fraudulently applied for, and received, at least six PPP and EIDLP loans, totaling approximately $770,000, on behalf of purported corporate entities they controlled. As part of the scheme designed to mislead the SBA and a financial institution disbursing the funds, the supporting documentation submitted by the defendants contained false information, including the identity of the individual applying for the loan, the number of employees, revenue, payroll costs, and the intended use of the loan proceeds. Instead of using the funds for disaster relief, Cornwall and Williams diverted them for their personal use, including the discharge of personal credit card debt and the purchase of cryptocurrency.
Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Enacted on March 29, 2020, the CARES Act provided emergency financial assistance in connection with economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP. The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities. The PPP provided for forgiveness of the loan if the recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.
Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters. Under the program, EIDLP recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL (EIDL Advance). The amount of an EIDL Advance was determined based on the number of employees working for the applicant. The EIDL Advance did not have to be repaid.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Bradley T. King is in charge of the prosecution.
Outcome: Defendants pled guilty.
Plaintiff's Experts:
Defendant's Experts:
Comments: