Midlothian Man Gets 4 Years For Wire Fraud PPP Scheme: Feds

CHICAGO—A Midlothian man was sentenced to four years in a federal prison for his role in a PPP scheme, in which he was alleged to have submitted fraudulent applications to receive small business loans. James Townsend, also known as Jay, pleaded guilty earlier this year to a federal wire fraud charge.

Between March 2021 and June 2021, federal prosecutors said that Townsend and two accomplices, Sarah Stokes, of Crestwood, and Franfort resident Amanda Heller, schemed to fraudulently obtain more than $2 million in small business loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

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The feds claim Townsend submitted and enticed others to submit more than 100 applications for loans under the Paycheck Protection Program on behalf of sole proprietorships said to be operated by Townsend, Stokes, Heller and others. According to federal prosecutors, the applications contained numerous false statements and misrepresentations regarding the purported proprietorships’ operations, including the number of employees, gross revenues, and payroll expenses.

The program was designed to provide small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead.

Townsend is said to have taught Stokes and Heller how to submit fraudulent PPP claims. The women allegedly recruited others to submit claims, for which the three were provided with kickbacks ranging from $5,000 to $10,000 from the applicants. To support the applications, the trip submitted false documents, including made-up gross revenue, employee income, payroll, and other expenses, according to the charges.

In May 2021, federal prosecutors said that an FBI informant contacted Heller, asking her to file a small business loan. According to court documents, Heller indicated she would not arrange a loan for over $40,000. She asked another person, identified as “Individual A,” who gave out her number, saying the informant felt “police ish.”

Both women pleaded guilty to a federal wire fraud charge last year. Stokes was sentenced to 18 months in federal prison. Heller will be sentenced in October.

Townsend pleaded guilty earlier this year to a federal wire fraud charge. On June 24, U.S. District Chief Judge Virginia M. Kendall sentenced Townsend to four years in federal prison and ordered him to pay full restitution.

“Defendant’s crime was serious,” Assistant U.S. Attorney Adam L. Rosenbloom argued in the government’s sentencing memorandum in Townsend’s case. “He defrauded the government of millions of dollars meant to help regular Americans survive a once-in-a-lifetime pandemic.”