A Maryland man has admitted to engaging in a scheme to defraud the government by filing phony COVID-19 relief loan applications and falsifying tax records, according to an announcement from U.S. Attorney Erek L. Barron for the District of Maryland in partnership with Special Agent in Charge Kareem A. Carter from the IRS-CI Washington D.C. Field Office. Melvin Thompson Jr., 34, from Chestertown, pleaded guilty to one count of wire fraud and filed a false tax return following fraudulent loan applications submitted under the coronavirus relief package known as the CARES Act.
According to the Department of Justice, Thompson's fraudulent activity began around March 2020. It persisted until February 22, 2021, when he misrepresented business revenues and expenses on four corporate tax returns filed with the IRS to secure economic injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) funds for struggling businesses. He simultaneously engaged in high-frequency trading with the majority of these funds, purchasing and selling over $12 million in securities through TD Ameritrade—a vast sum encapsulated by the winds of a tumultuous market he essentially lost, save for a slice carved out to purchase a 2020 Lincoln Navigator.
The CARES Act, enacted to bolster the economy amidst the pandemic, provides emergency financial help to suffering Americans. Specifically, the PPP and EIDL, overseen by the Small Business Administration (SBA), offered loans to keep employees on the payroll and cover urgent costs. Thompson took advantage of these programs, submitting tax returns with false information to the IRS to support his loan applications. However, rather than supporting a business and its employees, the money fed into the volatile world of options trading, where he frittered away most of the $791,004 obtained.
The Department of Justice has established strike forces nationwide to prosecute large-scale, complex pandemic relief fraud cases. These efforts combine efforts from various law enforcement agencies to trace and target illegal activities linked to relief funds. Thompson's case arose as part of these targeted efforts. According to a press release from the Department of Justice, sentencing is set for March 19, 2025.
The U.S. Attorney's Office praises the collaborative work with the IRS-CI for identifying Thompson's fraudulent activities. Assistant U.S. Attorney Sean R. Delaney is in charge of prosecuting this case. For those seeking additional information or wishing to report COVID-19 fraud, resources are available at the Justice Department's website or through the National Center for Disaster Fraud Hotline.
