Two Missouri Veterans Affairs employees charged in COVID loan fraud scheme

(The Center Square) – Two Missouri men, one a current employee and the other a former employee of the Department of Veterans Affairs, pleaded not guilty to charges of fraudulently obtaining federal pandemic loans.

Kahroun Armstrong of Black Jack, Mo., and Dortatius Hill of St. Louis were indicted separately on the same charges, two counts of bank fraud, two counts of wire fraud and one count of making a false statement. Armstrong is no longer employed by the Veterans Administration, according to information from the U.S. Attorney’s Office in the Eastern District of Missouri. The Department of Veterans Affairs Office of the Inspector General investigated the case.

The alleged fraud occurred with the Paycheck Protection Program loans. The program was created during the pandemic to assist businesses with meeting payroll and other expenses as the government shut down business activity to prevent the spread of COVID-19.

The Small Business Administration made or guaranteed more than $1 trillion in loans and grants and assisted more than 10 million small businesses through its four pandemic relief programs, according to the U.S. Government Accountability Office. In March, the SBA agreed with the GAO recommendation to conduct a formal fraud risk assessment and develop a strategy to manage risks.

Hill was indicted for applying for two loans from the program. On April 2 and 9, 2021, he allegedly applied for loans for the company, “Dortatius Hill,” and claimed the company had a gross income of $120,000.

Hill received one loan for $20,833 on April 16, 2021, and another on May 5, 2021. When the program allowed the loans to be forgiven as the pandemic ended, Hill fraudulently sought forgiveness.

Armstrong fraudulently applied for a loan for Arm & Arm In Home Health Care Services, LLC, on March 29, 2021, according to the indictment. He applied for another loan on behalf of Arm & Arm Motors, LLC, on the same day.

Armstrong falsely stated the health care company was founded in 2018 and had $145,655 in gross income and Arm & Arm Motors had gross income of $155,000, according to the indictment. Armstrong allegedly claimed both loans would be used for payroll costs, rent, utilities and other expenses.

Armstrong received two loans, each for $20,832, for both businesses. Armstrong requested the loans be forgiven and was granted the action by SBA.

The sentence for a bank fraud conviction is up to 30 years in prison and a $1 million fine, or both prison and a fine. Punishment for a wire fraud conviction is up to 20 years in prison and a $250,000 fine. Making a false statement carries up to a five-year prison sentence and a $250,000 fine.