Fake Roanoke businesses created in COVID fraud case, indictment alleges (2024)

Twenty-seven Roanoke businesses, most of them existing only on paper, received more than $1.5 million by defrauding the government’s pandemic assistance loan program, federal prosecutors say.

The scheme, detailed in an indictment unsealed Wednesday, was allegedly run by a 31-year-old businesswoman and two co-conspirators who helped people create fictitious companies and then apply for loans from the Paycheck Protection Program.

Jaimeka Mechelle Austin, the owner of Mechelle’s Boutique, is portrayed as the brainchild of an operation that promised quick cash from PPP, a Small Business Administration program created in 2020 to provide forgivable loans to businesses crippled by the COVID-19 pandemic.

Austin and 23 others are charged with a combined 142 counts of wire fraud, conspiracy to commit wire fraud, money laundering, making false statements, and fraud in relation to an emergency benefits program.

The purported owners of numerous alleged sham businesses – including a home cleaning service, a lawn care provider, a dog kennel, a moving service, a chimney sweep and a childcare center – received multiple loans.

Rather than spend the money on paychecks for furloughed employees or other business purposes, as required by the PPP, the defendants used it for personal expenses – including paying Austin for her assistance in obtaining the loans, the indictment alleges.

“The Paycheck Protection Program was put in place when the world’s economy was battling a once-in-a-generation health crisis. This program provided much needed financial relief to keep small businesses open,” U.S. Attorney Chris Kavanaugh said in a statement Wednesday.

“However, in the midst of this global crisis, a small number of people saw an opportunity to commit fraud and other criminal conduct,” Kavanaugh said.

Austin, Kiearra Desaray Gardner, 35, and an uncharged tax preparer referred to in court records as “Co-Conspirator 1” are accused of creating false tax records and other documents that were then used by the loan applicants.

Among the false information submitted was the date the business was established, the indictment states. One of the conditions of receiving a PPP loan was that the business must have been in operation before the pandemic struck in early 2020.

An investigation began in May 2021, when FBI authorities received a tip from a confidential informant that Austin was “heavily involved in obtaining fraudulent PPP loans for numerous individuals in Northwest Roanoke,” according to a search warrant filed in the case.

Austin, who has been incarcerated for petty larceny and other crimes, learned from a fellow inmate how to collect money from the program for her business, the woman’s clothing store boutique, the informant said.

After receiving her first PPP loan, Austin made “numerous large dollar retail purchases” from luxury fashion houses such as Gucci, according to the search warrant, and spent about $10,000 on a two-week stay at a high-end resort in Puerto Rico.

It didn’t take long for Austin to start telling others about getting easy money from the government, federal authorities say.

From June 2020 to May 2021, Austin communicated via Facebook Messenger with more than 40 people about fabricating records – including establishing limited liability companies with the SCC – for the purpose of obtaining PPP loans, the search warrant states.

“I can get you 20 you gotta pay me 5 when you get it,” the warrant quotes Austin as saying in an apparent reference to $20,000 and $5,000.

Records subpoenaed from the social media company show a post from Austin that featured a photograph of several well-dressed woman with the caption: “We come from the church of PPP, coming to collect our offering.”

Another post cited in the search warrant reads: “They giving out money all types of ways all over the world for the littlest s—-. Who gives asf if you gotta pay it back & they can’t put everybody in jail!”

The Paycheck Protection Program was created by Congress in 2020 to provide small businesses, nonprofit organizations and other qualifying participants with funds to pay for up to eight weeks of payroll costs for employees idled by the pandemic.

Cheating soon spread almost as quickly as the highly contagious virus that killed an estimated 1.2 million Americans.

More than $200 billion in fraudulent loans were dispersed through PPP and other pandemic relief programs, the Small Business Administration’s inspector general said in a 2023 report. That amounts to about 17% of the money from the assistance efforts, which are no longer in operation.

“The allure of ‘easy money” in this pay and chase program attracted an overwhelming number of fraudsters,” the report stated.