An Arizona man along with three associates, have been indicted on charges of conspiring to commit a large-scale fraud against the U.S. Small Business Administration (SBA) involving COVID-19 relief funds. The U.S. Attorney's Office for the District of Oregon announced that Eric Karnezis, 43, of Sedona, Arizona, is facing charges including conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering, a scheme that sought to exploit at least $178 million intended for aiding small businesses during the pandemic, according to the U.S. Attorney's Office, District of Oregon.
The indictment alleges that from January 2021 up until March 2022, Karnezis and co-defendants Lynisha Wells, 47, and Nikkia Bennett, 43, both of Chula Vista, California, and Fredrico Williams, 48, of San Diego, gathered and used fraudulent business information to submit at least 1,300 phony Paycheck Protection Program (PPP) loan applications, as per the U.S. Attorney's Office, District of Oregon. The indictment also asserts that the conspirators created fake documents like false payroll records and tax filings to support their loan applications. Of the millions sought, approximately $105 million in loans were funded.
After an initial not-guilty plea in the District of Arizona, Karnezis was released on conditions pending his arraignment set for September 24, in Oregon, as detailed by the U.S. Attorney's Office, District of Oregon. His co-defendants have also made their court appearances in Oregon, with Wells and Bennett granted conditional release pending their jury trial, scheduled for February 11, 2025. Williams is due for arraignment on September 20.
Their alleged offenses of wire fraud and money laundering carry a potential sentence of up to 20 years in federal prison, three years supervised release, and fines reaching $250,000 or double the gross gains or losses related to the crimes. The joint investigation leading to these charges involved the SBA Office of Inspector General, IRS Criminal Investigation, the U.S. Treasury Inspector General for Tax Administration, and the Naval Criminal Investigative Service. The case prosecutors are Assistant U.S. Attorneys Meredith Bateman and, Robert Trisotto of the District of Oregon.
