$2.1 million in fraudulent CARES Act loans used to buy yacht, DC

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WASHINGTON, DC – A DC man faces federal charges for fraudulently obtaining more than $2.1 million in Paycheck Protection Program (PPP) and Economic Disaster Loans (EIDL) loans. , according to a statement from the U.S. Attorney’s Office for the District of Columbia.

DC resident Kenneth Gaughan, 41, was arrested and charged Tuesday on a criminal complaint that said he fraudulently obtained over $2.1 million in PPP and EIDL loans and economic disaster loans, which he used, in part, to buy a $300,000 yacht, a $1.13 million townhouse and a luxury sports sedan from $46,000.

Gaughan was also charged on Tuesday with a separate indictment in connection with an embezzlement scheme involving the theft of more than $472,000 from the Catholic Archdiocese of Washington, D.C. (ADW), where he was previously Deputy Superintendent.

The complaint related to the PPP/EIDL loan fraud case charged Gaughan with one count of bank fraud, theft of public funds, wire fraud and money laundering. The complaint says Gaughan sued and received approximately $2.1 million in loans by applying to the Small Business Administration on behalf of several businesses, which he falsely claimed were registered emotional support animals. According to the complaint, Gaughan used some of the loan proceeds to purchase a 2020 Cruisers Yachts 338 CX 33-foot watercraft, a 2020 Kia Stinger and a townhouse in the northeast. The government obtained a warrant allowing it to seize the yacht and vehicle, as well as Guaghan’s investments and bank accounts. A civil forfeiture complaint is filed against the house purchased by Gaughan and a lis pendens is filed on that property.

PPP loans are part of the CARES (Coronavirus Aid, Relief, and Economic Security Act), which was signed into law March 29 to provide emergency financial assistance to millions of Americans facing economic hardship from the coronavirus pandemic. coronavirus. EIDL is an SBA program that provides assistance to businesses experiencing a temporary loss of revenue.

“We will not tolerate the exploitation of this national emergency for personal gain,” Acting U.S. Attorney Michael R. Sherwin said in the statement. “This office will not allow fraudsters to steal taxpayers’ money intended to help small businesses that are currently struggling due to the COVID-19 pandemic.”

Kelly R. Jackson, IRS-CI special agent in charge of the DC Field Office, said it’s unfortunate that “greedy individuals” are taking advantage of a program designed to help businesses affected by the pandemic to s ‘enrich.

“This conduct will be investigated to ensure the crooks are held accountable for stealing this money from those who needed it,” Jackson said.

The 12-count indictment in relation to the archdiocese alleges that Gaughan conducted a scheme involving mail fraud, wire fraud and money laundering to defraud ADW of more than $472,000.

Gaughan worked as an assistant superintendent at ADW, which is headquartered in Hyattsville, Maryland. Between at least June 2010 and April 2018, he made ADW pay bills to three companies he owned and controlled, according to the indictment. The money was intended to pay for anti-bullying and crisis intervention programs. Gaughan is accused of creating virtual and private mailboxes in order to receive checks from ADW, depositing the money into accounts he controlled, and then converting it into cash for his personal use. , according to the authorities.

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