(The Center Square) - An Arizona man and three associates have been charged in a scheme to defraud the U.S. Small Business Administration of at least $178 million in loans meant to help small businesses during the coronavirus pandemic, according to the U.S. Attorney for the District of Oregon.
Eric Karnezis, 43, from Sedona, Arizona, has been charged with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering in a 23-count indictment. His co-defendants are Lynisha Wells, 47, and Nikkia Bennett, 43, both from Chula Vista, California, and Fredrico Williams, 48, from San Diego.
From January 2021 to March 2022, Karnezis allegedly conspired with various recruiters, including Williams, to obtain fraudulent business information from customers like Wells and Bennett. They used this info to submit fraudulent Paycheck Protection Program loan applications to the U.S. Small Business Administration.
"To facilitate the scheme, Karnezis and his co-conspirators created fictitious documents to support their fraudulent loan applications, including false payroll information and tax documents," a release explained.
Overall, Karnezis allegedly submitted and caused to be submitted at least 1,300 PPP applications. These applications tried to get over $178 million from SBA. The federal government funded about $105 million requested from these fraudulent applications.
One day after his arrest in Sedona, Arizona, Karnezis made his first federal court appearance in the District of Arizona on September 6, 2024, and pleaded not guilty. In a detention hearing held Tuesday, Karnezis was released as he awaits his arraignment in the District of Oregon on September 24, 2024.
Bennett and Wells made their initial appearances and faced arraignment in the District of Oregon on August 23 and August 29, 2024, respectively. They were both released as they await a three-day jury trial that will start on February 11, 2025. Williams will face arraignment in Oregon on September 20, 2024.
Conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering each carry sentences of 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," the release said.
Over 50 people have been charged in Oregon for fraud schemes targeting federal COVID-19 relief programs since January 2021.
These fraudsters tried to steal over $903 million in federal funds; 38 people have been convicted for these crimes. They were sentenced to 631 months in federal prison combined, plus 1,194 months of probation and/or supervised release.
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