Please E-mail suggested additions, comments and/or corrections to Kent@MoreLaw.Com.
Date: 03-20-2024
Case Style:
Case Number: 23-CR-238 (JMA)
Judge: Joan M. Azrack
Court: The United States District Court for the Eastern District of New York
Plaintiff's Attorney: The United States Attorney’s Office for Brooklyn
Defendant's Attorney:
Description:
Defendants Conspired to Fraudulently Obtain Disaster Relief Loans and Used Proceeds to Discharge Credit Card Debt and Buy Cryptocurrency
Earlier at the federal courthouse in Central Islip, Arthur Cornwall, a former signal maintainer with the New York City Transit Authority, and Sean Williams, a former New York State Court Officer, were each sentenced by United States District Judge Joan M. Azrack to 18 months in prison for 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 Court also ordered the defendants to pay $770,000 in restitution to the United States Small Business Administration. The defendants pleaded guilty to the charge in June 2023.
Breon Peace, United States Attorney for the Eastern District of New York and Daniel Brubaker, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the sentences.
“Abuse of public benefits programs, particularly shameful when those defrauding the government are public servants, will not be tolerated and not forgotten with the passage of time from the darkest days of the COVID-19 pandemic,” stated United States Attorney Peace. “The defendants’ theft of relief money, despite holding jobs with good salaries and benefits, so they could purchase real estate, cryptocurrency and pay off credit card bills with the stolen funds, is deserving of jail sentences. This Office and our agency partners will continue working to bring to justice those fraudsters who take advantage of a national emergency, and recover every dollar that they stole from the government.”
Inspector in Charge of the New York Division Daniel B. Brubaker said, “The sentencing today of these two defendants should serve as a clear message to anyone who schemes to steal the public’s money, Postal Inspectors and our law enforcement partners will track you down and see you prosecuted to the fullest extent of the law. What makes this case even more egregious is that the defendants were employed in positions of public trust when they stole money specifically intended for those struggling to keep their businesses afloat during the pandemic. Today is a win for the good guys and the people we protect, but the fight is far from over and we will continue to use every resource at our disposal to pursue anyone who attempts to defraud the public.”
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 defendants submitted supporting documentation that 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. Following their guilty pleas, the defendants resigned from their respective government jobs.
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 with assistance from Paralegal Specialist Samantha Schroder and Legal Assistants Danielle Casey and Janelle Robinson.
The Defendants:
ARTHUR CORNWALL
Age: 43
West Babylon, New York
SEAN WILLIAMS
Age: 42
Valley Stream, New York
Outcome:
Plaintiff's Experts:
Defendant's Experts:
Comments: