COVID Feature: Home of the Fraudulent

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Millions of Americans are financially suffering due to the severe negative impact the coronavirus pandemic has had on the economy. National monetary relief programs were approved to help relieve the financial stress put on individuals and businesses but many fraudsters have tried to take advantage of these programs for their own gain.

One of the programs that has been subject to the most fraudulent behavior in the past few months is the Paycheck Protection Program (PPP). The government approved more than $525 billion in low interest forgivable PPP loans granted through the Small Business Administration. The loans are meant to encourage businesses to retain their employees and continue payroll payments.

A Washington, D.C. man was recently charged with fraudulently obtaining more than $2.1 million in PPP and Economic Injury Disaster Loans. Kenneth Gaughan is accused of spending $1.5 million from approved loans on a house, yacht, and a new car. (These loans were not meant to fund a “Lifestyles of the Rich and Famous” shopping spree.) Charges include one count of bank fraud, one count of the theft of government funds, one count of wire fraud, and one count of money laundering. 

The criminal complaint against him alleges Gaughan applied for PPP loans on behalf of companies that falsely asserted they registered emotional support animals. (Involving sweet and innocent animals is unforgivable.) He is also accused of creating forged paperwork and bank records in an attempt to legitimize his loan applications.

Gaughan supposedly used the loan money to buy a $300,000 yacht, a $1.13 million row house, and a $46,000 2020 Kia Stinger. His yacht, Stinger, bank account, and other investments were seized upon his arrest. This is the latest in a string of fraud cases where the accused illegally used PPP loans to fund their lavish lifestyle. (While some people are struggling to feed their families, Gaughan thought he was in desperate need of a new yacht.)

Unrelated to the charges he is currently facing, Gaughan is also charged for defrauding the Catholic Archdiocese of Washington, D.C., of $472,000 from 2010 to 2018 when he worked there as Assistant Superintendent. (This fraudster likes to dabble in a little bit of everything. I’m guessing the Pope is not pleased.)

The charges against Gaughan are merely allegations. He is innocent until proven guilty in a court of law. (It won’t be long before we’ll see which way the scales tilt.)

Today’s Fraud of the Day comes from an article, ”Man charged with obtaining $2.1 million in COVID-19 relief funds and using it to buy a yacht and a new Kia,” published by Business Insider on August 14, 2020.

More than $525 billion in loans have been approved through the US government’s Paycheck Protection Program, intended to help businesses survive the COVID-19 pandemic. But one man is accused of instead spending $1.5 million of that on a house, a yacht, and a brand-new Kia.

A criminal complaint that was unsealed on Tuesday said Kenneth Gaughan, 41, from Washington, D.C., has been arrested and charged with fraudulently obtaining more than $2.1 million in PPP and Economic Injury Disaster Loans relief funds, according to the United States Department of Justice.

 

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.