PWC Business Partners Sentenced To Prison Time Over Nearly $1M In Pandemic Loan Fraud

MANASSAS, VA – Two Prince William County residents have been sentenced to prison time for business fraud conducted during the Covid-19 pandemic, the U.S. Attorney's Office for the Eastern District of Virginia announced.

According to the U.S. Attorney's Office, Karen J. DeMatteo, 65, of Haymarket, and her business partner, Tae Young Q. Jang, 65, of Nokesville, took out more than 15 Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDLs) for nearly $1 million for businesses that either were not operational or were misrepresented in loan applications.

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The PPP program was established by the CARES Act and was intended to provide small businesses with short-term relief during the economic turmoil of the Covid-19 lockdowns. The EIDL program was expanded during the pandemic.

DeMatteo and Jang had been business partners since 2013, according to the terms of their plea agreement. The two operated numerous businesses together, some of which conducted legitimate business activity while others were created for particular transactions and then left dormant after the transactions were completed.

Over the course of a year, from about April 2020 to March 2021, the two applied for more than a dozen loans intended to help small businesses stay afloat during the pandemic, lying about the nature of their businesses, the number of their employees, their revenue and their relationship to other businesses.

In all, the two collected $941,006 in proceeds from the COVID-19 relief loans and tried to collect an additional $1,000,312. They used about $119,000 to actually pay day laborers and other people employed by their companies and used the rest to buy houses and cryptocurrency and to make other purchases and investments.

Matteo also attempted to declare bankruptcy in December 2020, while hiding her ownership of some businesses and her cryptocurrency acquisitions.

Ultimately, Jang pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud in February and DeMatteo pleaded guilty to the same charge in March.

On Aug. 6, DeMatteo was sentenced to two years and six months in prison. On Aug. 27, Jang was sentenced to a year and five months in prison.

On Monday, the U.S. Small Business Administration announced the suspension of 870,000 U.S. borrowers connected to an estimated $39 billion in suspected fraudulent pandemic-era PPP and EIDL activity. The announcement is the culmination of a state-by-state pandemic-fraud crackdown and is the agency's largest suspension announcement to date, the SBA says, representing action against borrowers in 45 new states, six territories, and the District of Columbia.

More than 15,000 borrowers in Virginia are among those suspended.