A northern Pennsylvania man pleaded guilty Tuesday to perpetrating a wire fraud scheme to obtain more than $400,000 in federal COVID-19 relief funds, federal prosecutors said.
Hayes D. Horner Jr., 67, of Berwick, Columbia County, devised the scheme with co-conspirators to take advantage of the Economic Injury Disaster Loan program, according to prosecutors in the U.S. Attorney's Office for the Middle District of Pennsylvania.
The initiative, funded by the CARES act in March 2020, is managed by the Small Business Administration as an expansion of its disaster relief program to specifically aid businesses impacted by the pandemic.
EIDL funds are offered to struggling businesses in the form of low interest rate loans that are meant to cover fixed debts, payroll and business obligations that can not be met due to pandemic hardships. The loans are not available to cover lost sales or profits.
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Horner used his business, Horner's Towing and Recovery, as a front to work with others to fraudulently obtain EIDL funds and attempt to pay his co-conspirators, who were not named by prosecutors.
In May and June 2020, Horner allegedly submitted loan applications to the SBA on behalf of two people, a Massachusetts man who had no knowledge of the application and a deceased person from Arizona.
In July, Horner helped open two bank accounts in the name of his towing business at two separate banks, prosecutors said. The accounts were meant to receive $408,000 in EIDL funds, though only a portion of that amount actually was approved and deposited. The other loan applications were rejected by the SBA.
Horner allegedly withdrew about $58,000 in fraudulently obtained funds from one of the bank accounts in his company's name and used the money for personal expenses. The funds were removed from the account through debit transactions and cash withdrawals over a period of several days in July 2020.
Horner also allegedly attempted unsuccessfully to wire about $165,000 to accounts controlled by his co-conspirators, including one account at the Bank of China in Hong Kong.
Investigators ultimately seized over $100,000 in fraudulently obtained EIDL funds from a bank account under Horner’s control.
Horner has agreed to pay restitution of $158,900 and forfeit $100,583 in a bank account of his business, PennLive reported.
Pennsylvania Attorney General Josh Shapiro established the COVID-19 Fraud Enforcement Task Force to monitor, investigate and prosecute cases involving attempts to steal relief funds.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud hotline at (866) 720-5721. Information also can be reported online via the NCDF Web Complaint Form.