The last of eight defendants in a $17 million COVID-19 relief fraud scheme was sentenced on Tuesday in Tennessee.
Frederick Smith, 56, received 23 months in prison for his role in defrauding federal disaster relief programs. The scheme targeted two major pandemic aid programs designed to keep businesses afloat during lockdowns. All eight defendants have now been sentenced to a combined 96 months in prison and 45 months of home detention.
Rodrick Flowers, 49, received the harshest sentence at 58 months in prison. The Memphis resident orchestrated fraudulent loan applications for the Economic Injury Disaster Loan program and Paycheck Protection Program.
Smith’s 23-month sentence was the second longest among the group. Other defendants received varying terms, from Jarvys Jones’s 12 months to minimal prison time for elderly defendants.
Mary Payne, 63, got six months in prison plus community confinement and home detention. Cleveland Wells, 67, and LaTonya Herman, 46, each received one month in prison followed by five months of home detention.
Two defendants avoided prison entirely. Brian Mays, 41, received 18 months of home detention, while Krystall Sherrod, 36, got 12 months of home detention.
Court documents reveal the defendants submitted false loan applications prepared by Flowers. The applications contained lies about employee numbers, gross revenues, and average monthly payroll.
Instead of using funds for business expenses, defendants spent the money on personal items. All eight pleaded guilty to wire fraud charges before sentencing.
Multiple federal agencies investigated the case, including the Treasury Inspector General for Tax Administration and inspectors general from the Federal Housing Finance Agency and FDIC. The Justice Department’s Criminal Division prosecuted the case.
The sentencings conclude a major fraud case that emerged from pandemic relief efforts. Billions in COVID aid attracted fraudsters nationwide who exploited emergency programs meant to save struggling businesses.