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Date: Sept. 15, 2026
Contact: newsroom@ci.irs.gov
Morgantown, WV – The Northern District of West Virginia, today, announced the sentencing and plea agreement as part of a nationwide enforcement action led by the Justice Department’s National Fraud Enforcement Division, the Small Business Administration, and the SBA Office of Inspector General targeting fraud in the SBA’s Paycheck Protection Program (PPP). The Northern District of West Virginia was a key participant in this surge effort.
From June 12 to Sept. 1, federal prosecutors across the country facilitated fraud enforcement actions spanning over 160 criminal defendants, including approximately 80 newly charged defendants, reaching approximately $245 million dollars in intended loss to American taxpayers.
“These defendants deliberately stole from programs funded by American taxpayers and intended to support legitimate small businesses,” said United States Attorney Matthew Harvey. “Our office will aggressively pursue those who misuse federal funds and will hold accountable anyone who attempts to defraud the United States.”
“Pandemic loan relief was meant to keep American small businesses alive during government lockdowns—not line the pockets of fraudsters,” said Attorney General Todd Blanche. “The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications— but they will now be prosecuted to the fullest extent of the law.”
“This summer surge shows what is possible when dedicated public servants across the country work together with a single purpose,” said Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division. “Our mission is clear: protect taxpayer funds, safeguard the integrity of federal relief programs, and deliver justice to those who exploited them. We will remain steadfast every day—standing shoulder-to-shoulder with our partners—to identify fraud, pursue those responsible, and restore confidence in the programs meant to help American small businesses thrive.”
“Today’s announcement represents the largest-ever action against perpetrators of SBA fraud, with 870,000 suspended borrowers tied to $39 billion in suspected fraudulent PPP and COVID EIDL activity. In partnership with Vice President Vance and the White House Task Force to Eliminate Fraud, we’re putting fraudsters on notice: the federal government will no longer turn a blind eye to those who stole from taxpayers and exploited programs designed to sustain small businesses during the pandemic,” said SBA Administrator Kelly Loeffler. “With demand letters going out to suspected fraudsters, we’re also sending a clear message that they must repay their debts or face Treasury collections and possible federal law enforcement. Under this Administration, the free ride is over. We are restoring accountability, recovering taxpayer dollars, and protecting SBA programs for the legitimate small businesses they were created to serve.”
“Operation No Doze brings a focused and coordinated approach to pursuing fraud in SBA’s pandemic relief programs,” said SBA Inspector General William Kirk. “By concentrating our investigative resources and working closely with SBA and our law enforcement partners, we are strengthening our ability to identify fraud, recover taxpayer funds, and hold accountable those who exploited programs created to help small businesses in a time of extraordinary need. This initiative makes clear that the passage of time does not diminish our commitment to accountability.”
James Baldwin, II, owner of Select Decks, a business in Morgantown, West Virginia, was sentenced to 30 days in federal prison and ordered to pay $1,007,223 in restitution. Baldwin applied for and received several Paycheck Protection Program (PPP) loans during the COVID-19 pandemic, both for his deck building business, Select Decks, and for three other businesses that were not in operation before the pandemic. Baldwin falsified documents for the loan application to obtain $738,230 in PPP loans from multiple banks and then obtained forgiveness for the loans from the Small Business Administration (SBA).
Baldwin also failed to pay $258,993 in payroll taxes to the Internal Revenue Service. Beginning in tax year 2016, Baldwin issued pay stubs and W‑2 forms to his employees reflecting that employment taxes had been withheld. However, investigators determined that Baldwin failed to file required IRS Forms 941 or W‑3 for Select Decks and did not remit any of the withheld taxes to the Internal Revenue Service.
In a separate case, Kurt Ly, owner and operator of Vin Phat, Inc., in Morgantown, West Virginia, has admitted to a scheme to defraud federal pandemic relief programs designed to support small businesses during the COVID‑19 crisis. According to investigators, Ly of Morgantown obtained Paycheck Protection Program (PPP) loans, used the funds for impermissible expenses, and then obtained forgiveness from the SBA by falsely certifying to the SBA that the money was used for permissible business expenses.
In addition to the PPP loans, Ly received an Economic Injury Disaster Loan (EIDL) loan of $146,600 in August 2020 after certifying that the funds would be used solely as working capital for Vin Phat. Instead, investigators found that Ly used the money for large personal expenditures, including a $15,000 payment for a vehicle, multiple cryptocurrency investments, and transfers to his personal bank account.
The PPP program was created under the CARES Act to help small businesses maintain payroll and cover essential expenses during the public health emergency. Applicants were required to provide accurate payroll documentation, verify their identities, and certify that loan proceeds would be used only for permissible business purposes. In addition, borrowers seeking loan forgiveness were required to certify—under penalty of perjury—that PPP funds were spent on allowable expenses such as payroll, rent, mortgage interest, or utilities.
The Baldwin case was investigated by the Internal Revenue Service – Criminal Investigation and Homeland Security Investigations and prosecuted by Assistant United States Attorney Jennifer T. Conklin. The Ly case was investigated by the Federal Reserve Bureau - Office of Inspective General and is being prosecuted by Assistant United States Attorneys Jennifer T. Conklin and Eleanor F. Hurney.
On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.
IRS-CI is the law enforcement arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, identity theft and more. It is the only federal law enforcement agency with investigative jurisdiction over violations of the Internal Revenue Code. IRS-CI has 16 field offices located across the U.S. and maintains an international presence through attaché posts abroad.