Liberty County man and woman behind My Boyfriend’s Loans guilty of COVID aid fraud | USAO-EDTX

TEXARKANA, Texas — A Cleveland, Texas man and woman pleaded guilty to wire fraud offenses in the Eastern District of Texas, U.S. Attorney Brit Featherston announced today.

Clifton Pape, 47, and Sally Jung, 59, each pleaded guilty to wire fraud violations before U.S. Magistrate Judge Caroline Craven. As part of their plea agreements, Pape and Jung agreed to forfeit $680,710.31 and pay up to $3,223,870 in restitution.

According to court documents, Pape and Jung operated a sophisticated telemarketing program by the name of My Buddy Loans from a home in Cleveland, Texas. In exchange for a fee, My Buddy Loans took personal identifying information from the victims and promised to apply for a farm grant, which they said was available to those with as little as one acre of land. Instead, Pape and Jung actually filed fraudulent EIDL applications with the SBA that contained the victims’ personal identifying information. Based on these fraudulent claims, the SBA issued over $1.56 million in EIDL advances to people who were not eligible. Pape and Jung also submitted requests for an additional $1.44 million in EIDL advances that went unfunded because, among other reasons, funds appropriated by Congress for the EILD Advance program had run out.

Pape and Jung used Square’s credit and debit card processing service to charge the fees to third parties. Pape and Jung made at least 700 successful charges, securing at least $700,000 in charges. Pape and Jung then transferred the proceeds of the fraudulent scheme to a bank account they controlled. On one occasion, Pape used the proceeds of the fraud to pay for a traffic ticket. On another occasion, Pape and Jung used more than $3,600 from the fraudulent scheme to pay for a stay at La Cantera Resort in San Antonio. A photo from that stay shows Pape and Jung celebrating over sparkling wine and other drinks.

“This investigation has ended one of the nation’s largest COVID fraud schemes in terms of the number of fraudulent EIDL claims,” said U.S. Attorney Brit Featherston. “Well-intentioned and needed economic aid (taxpayers’ money) has been brazenly stolen from legitimate and deserving claimants. We ask those with information about the My Buddy Loan fraud scheme, including those who believe they may be a victim, to call the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720 -5721 or file a complaint using the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

“The predators who have perpetuated schemes to steal vital funds aimed at mitigating economic damage to small businesses across the country will be brought to justice,” SBA Inspector General Hannibal Ware said. “The OIG continues to root out fraud and protect the integrity of SBA programs. I want to thank the United States Department of Justice and our law enforcement partners for their dedication and pursuit of justice.

“Clifton Pape and Sally Jung used My Buddy Loans to exploit the Small Business Administration’s Economic Disaster Loan Program (EIDL) while defrauding and misleading hundreds of individuals,” the statement said. Special Agent in Charge William Smarr of the US Secret Service Field Office in Dallas. . “The Secret Service stands ready with our law enforcement partners, like the SBA Inspector General’s Office, to combat pandemic fraud. The Secret Service will continue to aggressively investigate and prosecute those who violate public trust and exploit federal relief programs for their own gain.

The CARES Act is a federal law enacted in March 2020 designed to provide emergency financial assistance to millions of Americans suffering from the economic effects caused by the COVID-19 pandemic. One of the sources of relief provided by the CARES Act was authorization or EIDL advances and low-interest loans to small businesses to meet financial obligations and operating expenses that might have been met if the disaster had not happened. Under the EIDL program, applicants were eligible for a repayable advance of up to $10,000 if they had ten or more employees.

A federal grand jury returned an indictment charging Pape and Jung with federal violations on Feb. 10, 2021. They each face up to 30 years in federal prison. The maximum statutory sentence prescribed by Congress is provided here for informational purposes, as the sentence will be determined by the court based on advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled following the completion of a pre-sentence investigation by the US Probation Board.

This matter is being investigated by the United States Secret Service and the Office of the Inspector General of the Small Business Administration and is being prosecuted by Assistant United States Attorney Jonathan R. Hornok.

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