A Liberty County pair faces federal prosecution in Texarkana for a COVID aid rip-off, allegedly filing hundreds of pretend mortgage applications for customers and pilfering $1.3 million from govt coffers.
Clifton Pape and Sally Jung, of My Buddy Financial loan, then went on a expending spree with their illegal earnings, including a go cart tour in Conroe and glitzy holiday at a San Antonio resort, in accordance to court docket paperwork submitted in the Eastern District of Texas.
Pape and Jung, whose company was registered to an address in Houston, are accused of charging applicants additional than $1,000 to fill out their paperwork for a $10,000 agricultural grant by way of the Tiny Business enterprise Administration’s CARES Act funding, aimed at firms harmed by the coronavirus epidemic. Rather, their mortgage organization developed cookie cutter programs for every single of the small business candidates that ended up fraudulent, officers claimed.
Investigators say the pair submitted 222 Financial Injury Disaster Financial loan apps in June and July for companies that all transpired to have precisely 10 employees — the amount essential to unlock the highest $10,000 through the application. The SBA granted $10,000 progress resources to 130 of those candidates for a full of $1.3 million.
Pape, 45, and Jung, 58, equally of Cleveland, are charged with committing a big fraud. A federal magistrate uncovered there was probable induce to carry on. They waived their correct to a preliminary hearing on Jan. 20 and are free on $20,000 unsecured bond.
Jung’s attorney declined to comment on the allegations and Pape’s counsel did not reply to a ask for for remark. Pape and Jung also could not be arrived at on Tuesday. Messages still left at many numbers beneath their names were not returned. At a Houston deal with referenced in court docket files, there was no obvious trace of Jung or Pape — or their company. A protection guard allow a reporter check out a electronic stock in the lobby of the building in West Oaks, which did not clearly show any matches.
Staff with the U.S. Mystery Support created their situation towards the pair following having an undercover formal file for an software by means of their business enterprise.
Investigators pulled lender records and matched them to an Aug. 1, 2020, photograph from Pape’s Google data that showed him with Jung wearing bracelets from La Cantera Vacation resort, in accordance to courtroom documents. Four days later on, Pape is accused of shelling out $3,696.77 he gathered from candidates for fraudulent COVID reduction money at La Cantera Resort in San Antonio.
Former U.S. Legal professional Stephen J. Cox, who stepped down from his post final week, mentioned in a assertion this thirty day period that the circumstance should prompt the public and banking community to continue being vigilant for fraud as another round of COVID reduction commences.
“At a time when compact businesses—the engines of our financial system in East Texas—most desired the assist that the Small Company Administration was speeding to supply, these men and women took advantage of customers of the community, depleting the out there resources for tiny businesses and lining their have pockets with fraudulent gain,” he claimed. “It is a precedence of the Division of Justice to discourage and prosecute this style of fraud.”
Sharon Johnson, distinctive agent in demand for the loan software for the central location of the Business enterprise Administration’s Office of the Inspector Normal, said her agency is on the lookout for fraudsters: “Those dependable for committing fraud versus SBA for private obtain will be determined and introduced to justice.”
Alejandro Serrano contributed.
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