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A COVID-19 Pesticide, Unproven Treatments, and Splashing Out On SBA’s Dime

Posted  June 5, 2020

The US DOJ continued its efforts to combat the sale of unproven and unregistered COVID-19 treatments and preventatives and charged purported “business owners” for CARES and PPP funds fraud this week.

A Georgia woman pleaded guilty to selling an unregistered pesticide, in violation of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Rong “Vicky” Sun, 34, of Fayetteville, Georgia, will be sentenced on June 29th for the violation. She faces up to one year in prison and a $100,000 fine for selling a Japanese-manufactured product –“Toamit Virus Shut Out”–on eBay, which she claimed would protect against COVID-19. It’s marketed as a card-shaped, wearable device, that acts as a portable air cleaner with the ability to “lift up” bacteria and viruses within 1 meter of the wearer’s body. None of the claims have been proven, nor was the product registered with the EPA, which is a requirement under FIFRA. DOJUSAO

Marc “White Eagle” Travalino, of Fort Davis, Texas, was served with a temporary restraining order on June 1, ordering him to stop selling remedies for COVID-19, and a host of other diseases and medical conditions, on his website “whiteeaglenativeherbs.net.” Travalino unwittingly sold his product to an undercover special agent who was seeking treatment for his hospitalized grandmother. After the sale, the FDA and FTC sent a warning letter to Travalino, directing him to cease and desist sales of the unapproved products. Contact from two federal agencies was apparently not enough of a deterrent, so Travalino met with and sold his product to yet another undercover special agent within the week following. His misguided tenacity resulted in his business and website being immediately shut down pending completion of the investigation. DOJ

Joseph Cherry II, 39, of Norfolk, Virginia, didn’t let the fact that he was already serving a term of federal supervised release stop him from scamming the government out of over $190,000 in Coronavirus Aid, Relief, and Economic Security (CARES) Act proceeds. Over a span of three months (March through May), he submitted fraudulent applications for multiple Economic Injury Disaster (EIDL) loans, as well as a Paycheck Protection Program (PPP) loan in April 2020. He quickly converted approximately $140,000 of the proceeds into cash or a cashier’s check. Cherry is under indictment for 10 counts of wire fraud, theft of government property, false statements to the small business administration, and money laundering, which could land him in prison for 10 to 30 years on each count. USAO

Benjamin Hayford, 32, of Centerton, Arkansas, applied for more than $8 million in forgivable loans from several banks under the CARES Act. He claimed fictitious, non-existent payroll expenses by providing fraudulent payroll documentation. The Limited Liability Partnership for which he was seeking funds, was created in April 2020, not on February 15, 2020 as claimed, which was a mere handful of days before he began applying for funds. In the federal criminal complaint, Hayford is charged with wire fraud, bank fraud, making false statements to a financial institution, and making false statements to the SBA. USAO

Darrell Baker, 51, of Detroit, Michigan, is perhaps the most generous of this week’s fraudsters, as he used some of his ill-gotten gains to purchase new cars for his relatives. From the $590,000 in PPP loan proceeds he received, Baker purchased four cashiers checks and withdrew an additional $60,000 in cash. He then purchased two Cadillac Escalades, a Dodge Charger, and a Hummer. He gave one of the vehicles to his sister, and another one to his brother-in-law. To receive this windfall, he used a dissolved corporation called “Motorcity Solar Energy, Inc.,” and claimed 68 employees, and compensation in 2019 totaling $2.8 million. His multiple business locations were nothing more than single-family residences and empty office suites. FBI Special Agent in Charge Steven M. D’Antuono stated that Baker’s actions “harmed hard-working Americans and deserving small businesses.” Further, “the FBI is committed to investigating anyone who seeks to take advantage of a global pandemic to line their own pockets at the expense of American taxpayers.” USAO

The above enforcement actions are reminders that no matter the environment, fraudsters will continue to game the system. Yet with government agencies on the lookout, and whistleblowers providing a second line of defense, fraudsters face stiff deterrents and the guarantee of a swift government response once detected. 

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Tagged in: Catch of the Week, COVID-19, Government Programs Fraud,


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