Lexington non-profit operator gets nearly 4 years in prison for fraud related to loans

A Lexington woman convicted of fraud in connection with more than $350,000 in loans has been sentenced to three years and 10 months in federal prison.

Kelly Harris is liable for a payment of $110,785 to the federal government under the sentence.

Harris and her husband, Neal Harris, applied for loans in 2020 under a federal program aimed at helping businesses get through the economic downturn during the COVID-19 pandemic.

The applications were for the Ruby E. Bailey Family Service Center, Turtle Doves, North Side Market, Grace Christian Fellowship Church and American Workhorse LLC, according to court documents.

The Bailey Center operated programs in Lexington that included food aid and after-school activities for low-income young people, while Turtle Doves was created to help Black farmers get crops to market, according to federal tax returns and the court record.

Neal Harris was the pastor at Grace Christian Fellowship when he applied for a pandemic loan for the church in 2020.

Not all the loans were approved, but the Harrises obtained a total of $357,600 in loans for three of the businesses, according to the U.S. Department of Justice.

A bank spotted the fraud and returned some of the money to the government, according to authorities.

A jury convicted Neal and Kelly Harris on eight charges each of wire fraud . They did not apply for all the loans jointly, so they face different repayment amounts.

The restitution amount for Neal Harris will be decided later.

U.S. District Judge Robert E. Wier sentenced Kelly Harris Monday. Neal Harris is scheduled to be sentenced next week.

Kelly Harris acted in good faith in applying for loans to try to keep her non-profit businesses afloat, but was in over her head in trying to handle the complex paperwork, her attorney, Ned Pillersdorf, said in a sentencing memorandum.

In letters to the court, several supporters said Harris is a devoutly religious woman who has worked hard to help others.

“Her commitment and tenacity were focused on her personal mission of helping others,” said Joseph C. Benton, a Richmond attorney.

However, the prosecutor, Assistant U.S. Attorney Kate K. Smith, said in a sentencing memo that Harris knowingly included false information in loan applications, submitted fabricated Internal Revenue Service documents and lied during the trial.

“The defendant’s conduct demonstrates a disregard for the law and a fundamental failure to appreciate the true purpose of the COVID-19 relief funds,” Smith wrote.

Wier had Kelly Harris taken into custody at the hearing Monday, according to the court record.