Brockton man sentenced for fraudulently obtaining more than $1.5 million in COVID relief funds


Date: April 10, 2024


BOSTON — A Brockton man was sentenced yesterday in federal court in Boston for a scheme to submit false applications to obtain Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL) funds through the Small Business Administration (SBA) that were made available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Joao Mendes was sentenced by U.S. District Court Judge Nathaniel M. Gorton to 27 months in prison, followed by one year of supervised release. Mendes was also ordered to pay restitution in the amount of $1,542,759 and the forfeiture of assets totaling $1,751,694. In December 2023, Mendes pleaded guilty to one count of wire fraud.

Beginning in or around June 2020 and continuing until at least in or around September 2020, Mendes submitted fraudulent PPP and EIDL loan applications on behalf of several companies, many of which were defunct. Mendes submitted multiple applications for a single entity to successive lenders until a loan was ultimately approved. Those applications contained conflicting information. The fraudulent PPP loan applications misrepresented the number of employees and the average monthly payroll expenses of Mendes’s various fictious businesses. Mendes also submitted false tax records in support of his loan applications. In his EIDL applications, Mendes misrepresented the number of employees, gross revenues and costs of goods sold for each business. Based on the fraudulent applications, Mendes and two of his relatives received over $1.5 million in PPP and EIDL funds. Once Mendes received the funds, he spent them for his own personal benefit—including for the purchase of cryptocurrency.

The United States seized cryptocurrency and fiat currency from over 20 accounts that, with additional funds turned over by Mendes, resulted in the recovery of $1.545 million in cryptocurrency and more than $206,000 in U.S. currency, which will be criminally forfeited.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of forgivable loans to small businesses for job retention and certain approved expenses, through the PPP. Another is the EIDL, through which the SBA offers loans that can only be used on certain permissible business expenses, which can include payment of fixed business debts, payroll, accounts payable, and other business-related expenses that could have been paid had the COVID-19 disaster not occurred. The American Rescue Plan Act established the Restaurant Revitalization Fund (RRF) to provide funding to help restaurants and other eligible businesses keep their doors open through forgivable loans for eligible uses.

Acting United States Attorney Joshua S. Levy; Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division; Tyler Hatcher, Special Agent in Charge of the Internal Revenue Service Criminal Investigation (CI), Los Angeles Field Office; Robert Manchak, Special Agent in Charge of the Federal Housing Finance Agency Office of Inspector General, Northeast Region; Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division; Mehtab Syed, Assistant Director in Charge of the Federal Bureau of Investigation, Los Angeles Field Office; Weston King, Special Agent in Charge of the Small Business Administration Office of Inspector General, Western Region; Patricia Tarasca, Special Agent in Charge of the Federal Deposit Insurance Corporation Office of Inspector General, New York Regional Office; Christopher J. Gust, Acting Special Agent in Charge of the U.S. Treasury Inspector General for Tax Administration, Northeast Field Division; and Brian Tucker, Special Agent in Charge, Office of Inspector General for the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, Eastern Region, made the announcement today. Assistant U.S. Attorneys Mackenzie A. Queenin of the Criminal Division, and Carol E. Head, Chief of the Asset Recovery Unit, and Trial Attorney Jennifer Bilinkas of the Criminal Division’s Fraud Section prosecuted the case. Attorney Advisor Scott J. Campbell of the Criminal Division’s Money Laundering and Asset Recovery Section provided significant assistance.

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.

CI is the criminal investigative 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. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.