Massachusetts Resident Sentenced for COVID Loan Fraud Involving Cryptocurrency Purchases
On Wednesday, April 10, 2024, Joao Mendes was sentenced in federal court for fraudulently obtaining over $1.5 million in COVID-19 relief funds through the Paycheck Protection Program and Economic Injury Disaster Loan Program.
The 60-year-old Brockton, Massachusetts man submitted numerous false applications for loans from June to September 2020, according to court documents. Mendes claimed to represent several companies, some of which were no longer operating, in applications sent to multiple lenders. The applications contained conflicting information about employee numbers and payroll expenses. Additionally, bogus tax records were submitted to support the fraudulent requests.
Through his deceitful scheme, Mendes received more than $1.5 million in PPP and EIDL loans that were intended for small businesses struggling due to the pandemic. Instead of using the funds for job retention or approved expenses, Mendes spent the money for personal gain including cryptocurrency purchases.
At his sentencing, Judge Nathaniel M. Gorton ordered Mendes to serve 27 months in federal prison, followed by one year of supervised release. He was also told to pay $1,542,759 in restitution and forfeit $1,751,694 in illegally obtained assets.
As part of the investigation, over $1.5 million in cryptocurrency and $206,000 in cash were seized from more than 20 accounts controlled by Mendes. The digital currencies and U.S. dollars will be criminally forfeited, according to prosecutors.
The Criminal Division’s Fraud Section led the prosecution with assistance from Department of Justice agencies, other Offices of Inspector General, and the FBI. Mendes pleaded guilty in December 2023 to one count of wire fraud.
The CARES Act relief programs were meant to provide emergency funds for Americans and small businesses impacted financially by the pandemic. However, individuals like Mendes have exploited vulnerabilities and abused the system for personal greed. This sentencing represents the ongoing efforts to bring schemers to justice and recover losses caused by pandemic fraud.
