Virginia business owner pleads guilty to multi-million dollar COVID-19 fraud scheme
Alexandria, Virginia – A Fredericksburg man, Sherman Green Jr., pleaded guilty to one count of conspiracy to commit wire fraud for his role in defrauding a federal COVID-19 relief program.
Sherman Green Jr., 34, established Green Information Solutions LLC (GIS) in September 2017 and subsequently opened business banking accounts for GIS at Navy Federal Credit Union (NFCU). The fraudulent activities began in May 2020 when a co-conspirator informed Green about the Paycheck Protection Program (PPP), a relief initiative by the Small Business Administration (SBA) to help businesses stay afloat during the pandemic. Green, with the help of his co-conspirator and a senior bank officer at Atlantic Union Bank, submitted a PPP loan application on behalf of GIS.
In the loan application, Green falsely represented himself as the President/CEO of GIS, claiming the company had seven employees with an average monthly payroll of $78,215.41. Based on these false claims, Atlantic Union Bank approved a first-draw PPP loan of $195,500, which was deposited into GIS’s account at the bank on May 11, 2020. Green then purchased cashier’s checks with the fraudulently obtained loan and deposited them into GIS’s NFCU business checking account. Although the checks’ memo lines referred to “payroll” and other business expenses, GIS did not have any employees or legitimate business expenses. Between May 2020 and March 2021, Green transferred $81,131.60 from GIS’s NFCU business checking account to his personal bank accounts.
In March 2021, Green and his co-conspirator submitted another fraudulent PPP loan application for a second-draw loan. This time, Green claimed GIS had five employees with an average monthly payroll of $57,486 and gross receipts of approximately $1,000,500 in 2019 and $700,000 in 2020. Based on these misrepresentations, Atlantic Union Bank awarded GIS a second-draw PPP loan of $143,715. Green set up payroll and expense accounts for GIS at the bank and transferred the funds into them. He then used these funds for purposes other than payroll, including a payment to Ford Motor Credit and transfers to his personal accounts.
To conceal his misuse of the PPP loans, Green created a QuickBooks account that falsely labeled transfers as “payroll” in bank statements. From June 15 to July 15, 2021, Green made seven such transactions, knowing they involved criminally derived property and were not being used for payroll.
Green is scheduled to be sentenced on September 3 and faces a maximum penalty of five years in prison. However, actual sentences for federal crimes are typically less than the maximum penalties. The final sentence will be determined by a federal district court judge after considering the U.S. Sentencing Guidelines and other statutory factors.
Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia; Stephen Ravas, Acting Inspector General for AmeriCorp; David J. Scott, Special Agent in Charge of the FBI Washington Field Office’s Criminal and Cyber Division; John Perez, Special Agent in Charge, Headquarters Operations, Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau; Michael J. Missal, Inspector General, U.S. Department of Veterans Affairs; and Amaleka McCall-Brathwaite, Eastern Region Special Agent in Charge for the SBA-OIG, made the announcement following U.S. District Judge Leonie M. Brinkema’s acceptance of the plea.
Assistant U.S. Attorneys Katherine E. Rumbaugh and Heidi B. Gesch are prosecuting the case, ensuring that justice is served for the misuse of federal relief funds intended to support businesses during the COVID-19 pandemic.
