Maryland Man Facing Federal Charges For Fraudulently Obtaining Covid-19 Cares Act Paycheck Protection Program Loan

Baltimore, Maryland – A federal grand jury has returned an indictment charging Joseph Gillespie, age 34, of Baltimore, Maryland, with conspiracy to commit wire relating to the submission of fraudulent claims for the Paycheck Protection Program (“PPP”) benefits under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, enacted to provide emergency financial assistance to Americans suffering from the economic effects caused by the COVID-19 pandemic.  

The indictment of Gillespie was announced by United States Attorney for the District of Maryland Erek L. Barron and Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office.

According to the indictment, on August 13, 2019, Gillespie incorporated a business called JAG Investments LLC.  The stated purpose of the LLC was to “purchase properties and rehab in Baltimore.” On or about August 14, 2019, he opened an account at Wells Fargo for JAG Investments where he was the sole signatory.  The Defendant used JAG Investments for the purpose of applying for COVID-19 related benefits, such as a PPP loan. On or about October 17, 2020, Gillespie opened another account at First National Bank of Pennsylvania for JAG Investments where he was the sole signatory. 

In or about 2020, the Defendant and others worked to prepare materials in support of a fraudulent PPP loan application, including a false 2019 IRS Form 940 and a false February 2020 bank statement for the Wells Fargo Account.  On or about March 11, 2021, the Defendant and others caused the submission of a false 2019 IRS Form 940 and a false February 2020 statement for the Wells Fargo Account to Cross River Bank.  The false IRS Form 940 reflected that JAG Investments paid $276,209.72 in wages to all employees in 2019.  In fact, in 2019 and 2020, JAG Investments did not pay such wages and submitted no tax filings for tax years 2019 and 2020.  The false February 2020 bank statement for the Wells Fargo Account indicated that the account had an ending balance of $61,439.16.  In fact, Wells Fargo Account had an ending balance of $541.63. 1.  That same day, the Defendant searched on YouTube, among other things, “ppp loan audit” and “what can PPP loan be used for.” 

On or about March 15, 2021, as a result of the alleged misrepresentations, the PPP loan for JAG Investments closed and the Defendant received $138,104 in PPP funds.  The Defendant paid a co-conspirator 38,000, reflecting approximately 27 percent of the PPP loan amount received by JAG Investments, in exchange for the co-conspirator’s role in submitting the JAG Investments PPP loan application.

On or about March 17, 2021, after receiving the PPP loan for JAG Investments, the Defendant sought to establish payroll processing services through Heartland Payment Systems for the purpose of making payments to purported employees of JAG Investments.  On or about March 17, 2021, the Defendant provided Heartland with a list of JAG Investment’s purported employees and the employees’ purported wages.  Beginning on or about March 30, 2021 and continuing through August 6, 2021, the Defendant caused Heartland to process payroll for purported employees of JAG Investments.  After receiving the purported payroll payments, on multiple occasions in or about 2021, a purported employee of JAG Investments provided a portion of the purported payroll payments—sometimes more than 50 percent of the amount of the payment—back to Gillespie. 

If convicted, the Defendant faces a maximum sentence of 20 years in federal prison for wire fraud conspiracy and a mandatory sentence of two years in federal prison for aggravated identity theft.  Actual sentences for federal crimes are typically less than the maximum penalties.  A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors. 

An indictment is not a finding of guilt.  An individual charged by an indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. 

The District of Maryland Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.  The CARES Act was designed to provide emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic.  The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors.  The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds. 

For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.  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 (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

United States Attorney Erek L. Barron commended the FBI for their work in the investigation and thanked Baltimore County Police Department and SBA-OIG for their assistance.  Mr. Barron thanked Assistant U.S. Attorney Paul Riley who is prosecuting the cases.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao/md.

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