Capital Heights Man Faces 40+ Years In Prison For Federal Wire Fraud Conspiracy: Court

PRINCE GEORGE'S COUNTY, MD — A 25-year-old Capitol Heights man has pleaded guilty to federal wire fraud conspiracy, aggravated identity theft and illegal possession of a machine gun related to a scheme to fraudulently obtain more than $1 million in COVID-19 CARES Act Paycheck Protection Program loan applications, economic injury disaster loan applications and unemployment insurance claims.

“Fraudsters like Jerry Phillips often commit other crimes, as demonstrated by his illegal possession of a ghost gun, which he modified to be a machine gun,” said United States Attorney Erek L. Barron. “We will continue to use every legal means necessary to remove illegal guns from our communities and to hold criminals accountable.”

According to his plea agreement, from March 2020 to February 2022, Phillips worked with his brother and co-defendant, Jaleel Phillips, and at least one other person to fraudulently obtain COVID-19 related benefits, including filing fraudulent PPP loan applications, EIDL loan applications and unemployment insurance claims. Phillips and his co-conspirators created fictitious aliases, used the personal identifying information of real people and used defunct corporate entities or new business entities with no actual business operations to apply for EIDL and PPP loans, and unemployment benefits.

As part of the scheme, Phillips admitted that he created and used multiple fake identities to submit fraudulent PPP and EIDL loan applications, and used the personal identifying information of more than 20 real people in furtherance of fraudulent unemployment claims. The fraudulently obtained PPP and EIDL loans and unemployment insurance claims were deposited into the bank accounts opened in the names of the aliases, according to court documents. The money was then withdrawn by Phillips and his co-conspirators through ATM withdrawals and purchases made on the associated debit and credit cards or transferred between the various financial accounts established in the aliases’ names.

Phillips used $65,538.95 of the fraudulently obtained funds to purchase a 2020 Chevrolet Camaro, which he registered in his name at the Maryland Motor Vehicle Administration. Phillips also admitted that he personally obtained and controlled more than $1 million in fraud proceeds from the fraudulent PPPs and EIDLs.

A search of Phillips' residence recovered more than 25 fake driver’s licenses from multiple states and multiple identification documents from different jurisdictions with the same alias. Law enforcement also recovered four “ghost guns” that Phillips purchased online using an alias. Phillips admitted in court documents that he illegally modified one of the ghost guns into a machine gun capable of firing multiple rounds with one pull of the trigger.

Phillips previously pleaded guilty to his role in the wire fraud conspiracy and faces a maximum sentence of 30 years in federal prison for the wire fraud conspiracy; a mandatory sentence of two years in federal prison, consecutive to any other sentencing imposed, for aggravated identity theft; and a maximum of 10 years in federal prison for illegal possession of a machine gun.

“Jerry Phillips conspired with his brother to defraud the UI, PPP and EIDL pandemic relief programs of more than $750,000 in funds intended to assist those who were truly in need from the financial impact brought about by the COVID-19 pandemic,” said Troy W. Springer, acting special agent in charge of the National Capital Region, U.S. Department of Labor – Office of Inspector General.