LEXINGTON, KY (Thursday, September 26, 2024) – A Lexington man, Vonnie McDaniels, 35, was found guilty on Wednesday, by a federal jury sitting in Lexington, of four counts of wire fraud, for fraudulently applying for three Small Business Administration (SBA) Covid-19 relief loans and for fraudulently applying to the Lexington Fayette Urban County Government’s (LFUCG) federally funded Housing Stabilization Program (HSP), a tenant rent relief program; two counts of aggravated identity theft for submitting tenant rent relief applications, pretending to be his tenants; six counts of money laundering; and two counts of committing an offense while on conditions of release. He was convicted following a three-day trial.
According to the evidence at trial, McDaniels submitted a materially false application to the SBA, to obtain an Economic Injury Disaster Loan (EDIL), for one business, fraudulently obtaining a $100,000 loan. The Defendant also submitted three materially false Payment Protection Program (PPP) applications, for the same business and for another business that was no longer in operation at the time of the pandemic. Two of the three PPP applications were eventually funded, and McDaniels obtained $93,231. McDaniels also inflated numbers on his applications to increase the loan amount and uploaded fraudulent tax documents to support his numbers. In 2020, he obtained a total of $193,231 in disaster relief funds from the SBA. The theft was discovered by law enforcement when preparing for an earlier trial, back in June 2021, when McDaniels was previously convicted of bank fraud and aggravated identity theft.
McDaniels used the SBA loan proceeds to pay off personal credit cards and loans, free up home equity lines of credit, purchase a new property in South Carolina, and pay his unlawfully obtained mortgage, which had been the subject of his June 2021 bank fraud trial.
In 2021, McDaniels also submitted a materially false application to LFUCG’s HSP for tenant rent relief for two properties. McDaniels uploaded fraudulent leases, vastly inflating the monthly rent amount and pretended to be his two tenants when he submitted the tenant portions of the application. McDaniels solicited personal identifying information from his tenants, told his tenants about the rent relief program, and informed his tenants that they did not qualify. Then, he fraudulently obtained $45,000 in Covid rental relief assistance, while he continued to make his tenants pay their monthly rent. He committed these offenses while subject to conditions of release, following his prior conviction.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and Kathy Enstrom, Special Agent in Charge, Office of Inspector General, Federal Deposit Insurance Corporation, jointly announced the jury’s verdict.
The investigation was conducted by the Federal Deposit Insurance Corporation – Office of Inspector General. Assistant U.S. Attorneys Brittany Dunn-Pirio and Andrea Mattingly Williams are representing the United States in the case.
McDaniels is scheduled to appear for sentencing on January 24, 2025. He faces up to 20 years in prison, and a mandatory minimum sentence of two years for aggravated identity theft. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal sentencing statutes before imposing a sentence. McDaniels also faces potential fines, a forfeiture money judgment, and a judgment of restitution, as ordered by the Court.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
— END —
