COVID loan was allegedly obtained through false pretenses
A federal grand jury in Portland has returned an indictment charging a real estate developer with fraudulently obtaining COVID-relief program funds and laundering a portion of its proceeds, a statement from the US Attorney’s Office, District of Oregon revealed.
Michael James DeFrees, a 60-year-old resident of Vancouver, Washington and Lake Havasu, Arizona, was charged with wire fraud, bank fraud, and money laundering.
According to the indictment, DeFrees allegedly used two business entities to illegally obtain, under false pretenses, Economic Injury Disaster Loans (EIDLs) and Paycheck Protection Program (PPP) loans from the Small Business Administration (SBA) between April 02, 2020, and April 04, 2022.
The EIDL and PPP programs, through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enabled SBA to issue low-interest loans that have been adversely impacted by the pandemic.
In multiple loan applications submitted to two different banks in Washington, DeFrees indicated that he was the sole owner of Washington-based construction company Gateway National Corporation and Oregon-based real estate development company Yacht Harbor. His applications also claimed that he had never been convicted of any criminal offense or placed on parole or probation. However, at the time of submitting these applications, he was serving a term of probation for a 2017 conviction in the Western District of Washington for falsifying records in a bankruptcy proceeding.
Upon receiving the loan payouts, DeFrees allegedly laundered a portion of the money to a third business entity.
Wire and bank fraud are punishable by up to 20 and 30 years in federal prison, respectively. Money laundering, meanwhile, is publishable by up to 10 years in federal prison.