IRS - Internal Revenue Service
09/10/2024 | Press release | Distributed by Public on 09/11/2024 19:01
Arizona man and co defendants facing federal charges for roles in $178 million COVID 19 fraud conspiracy
Date: Sept. 10, 2024
Contact: [email protected]
Portland, OR - A federal superseding indictment was unsealed Monday in the District of Oregon charging an Arizona man and three associates for conspiring with one another and others to devise and carry out a scheme that attempted to defraud the U.S. Small Business Administration out of at least $178 million in loans intended to help small businesses during the COVID-19 pandemic.
Eric Karnezis of Sedona, Arizona, is charged in the 23-count superseding indictment with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering, along with co-defendants Lynisha Wells, and Nikkia Bennett, both of Chula Vista, California, and Fredrico Williams of San Diego.
According to the superseding indictment, from January 2021 and continuing until at least March 2022, Karnezis carried out a scheme whereby he conspired with recruiters, including Williams, to gather fraudulent business information from customers, including Wells and Bennett, and used the information to submit fraudulent Paycheck Protection Program (PPP) loan applications to the U.S. Small Business Administration (SBA). To facilitate the scheme, Karnezis and his co-conspirators created fictious documents to support their fraudulent loan applications, including false payroll information and tax documents.
In total, Karnezis submitted or caused to be submitted at least 1,300 PPP applications, which together attempted to obtain at least $178 million from SBA. Approximately $105 million in loans were funded in response to these fraudulent applications.
On Sept. 6, 2024, following his arrest in Sedona the day prior, Karnezis made his initial appearance in federal court in the District of Arizona and pleaded not guilty. In a detention hearing held today, Karnezis was released on conditions pending his arraignment in District of Oregon on Sept. 24, 2024.
Bennett and Wells made their first appearances and were arraigned in the District of Oregon on Aug. 23 and Aug. 29, 2024, respectively. Both were released on conditions pending a three-day jury trial scheduled to begin on Feb. 11, 2025. Williams will be arraigned in the District of Oregon on Sept. 20, 2024.
Conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering are punishable by up to 20 years in federal prison, three years' supervised release, and fines of up to $250,000 or twice the gross gains or losses resulting from the offense.
This case was investigated by the IRS Criminal Investigation (IRS-CI), SBA Office of Inspector General (SBA-OIG), the U.S. Treasury Inspector General for Tax Administration (TIGTA), and the Naval Criminal Investigative Service (NCIS). It is being prosecuted by Meredith Bateman and Robert Trisotto, Assistant U.S. Attorneys for the District of Oregon.
An indictment is only an accusation of a crime, and defendants are presumed innocent unless and until proven guilty.
Since January 2021, more than 50 people have been charged in the District of Oregon for their roles in fraud schemes targeting federal COVID-19 relief programs. Together, these defendants attempted to steal more than $903 million in federal funds. 38 individuals have been convicted for their crimes and sentenced to a combined total of 631 months in federal prison and 1,194 months of probation and/or supervised release.
IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.