COVID Feature: Investigating the Investigator

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Russian hacker hacking the server in the dark

Nadine Jackson of Dayton, Ohio pleaded guilty to wire fraud related to fraudulently obtaining two coronavirus relief Paycheck Protection Program (PPP) loans. She also pleaded guilty to making a false statement to a financial institution. (When the government doles out money, you can be sure fraudsters are quick to jump in line to get a handout from Uncle Sam.)

Jackson admitted in federal court that she fraudulently obtained PPP loans in the amounts of $1.3 million and $1.2 million through the Small Business Administration (SBA). These loans were obtained after Jackson filed false applications for a private investigation firm, Extract LLC, stating she had 73 employees.

Licensed Class A private investigators and security services businesses in Ohio must register the number of employees with the state. Actually, the only employee listed for Extract LLC with the state was Nadine Jackson. (I don’t think you can list ‘me, myself, and I’ on your application.) Jackson also submitted fraudulent tax documents with her application to support her claims. (The plot thickens.)

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed in March 2020 to provide emergency financial assistance to the millions of Americans who were financially impacted because of the coronavirus pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through PPP loans. (In this case, the government was not in a forgiving mood.)

PPP loans are granted to qualifying small businesses with the requirement that the funds be used on operation expenses such as rent, mortgages, and payroll costs. PPP loans are forgivable if a certain percentage of the loans are dedicated towards job retention and payroll expenses. The amount of the loan granted is dependent on the average monthly payroll of a company.

Jackson fraudulently claimed on her application that Extract LLC retained 73 employees with payroll expenses of $500,000. She was initially granted $1 million dollars in PPP loans before the bank flagged Jackson’s account for suspicious activity. (You’d think a private investigator would know how to cover their tracks better.) The granting bank recalled one of the PPP loans and the federal Government seized the other.

Another source of economic relief granted through the CARES act is Economic Injury Disaster (EID) loans. Jackson also applied for and received more than $46,000 in EID loans claiming that she needed funds for Extract LLC’s employees. On this application, Jackson only claimed the business had eight employees. (Because the best way to get away with a lie is to be inconsistent with the details.)  

The funds from the EID loan were transferred to Jackson’s business account where she then illegally transferred them to a different personal account through a series of transactions. The EID loans granted to Jackson have since been seized. (The funds are being redirected to people who really need financial assistance.)

Investigators interviewed four of the employees named on Jackson’s various applications. They claimed that they did not work for the company. (Some of the people they interviewed hadn’t even heard of the company.)  

Jackson faces up to 20 years in prison for wire fraud and up to five years for making a false statement to a financial institution. She has agreed to pay $1,290,817 in restitution to the U.S. Government.

Anyone with information about fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form.

Today’s Fraud of the Day comes from a Department of Justice Press Release, “Dayton business owner pleads guilty to COVID relief fraud,” published on November 16, 2020.

DAYTON – Nadine Consuelo Jackson, 32, of Dayton, Ohio, pleaded guilty before U.S. District Judge Michael J. Newman today to wire fraud related to two coronavirus relief Paycheck Protection Program loans.  She also pleaded guilty to making a false statement to a bank within the jurisdiction of a federal agency related to financial assistance for businesses who are suffering the economic effects caused by the COVID-19 pandemic.

According to court records, Consuelo Jackson fraudulently sought forgivable loans in the amount of $1.3 million and $1.2 million from the Small Business Administration by claiming to have 73 employees earning wages at a Dayton-based private investigation and security services business, Extract LLC.  In actuality, there were few to no other employees working at Extract LLC. Consuelo Jackson also allegedly submitted false tax documents in support of her fraud.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.