Developer Convicted of COVID-19 Relief Fraud

MIAMI – On Jan. 12, Eric Dean Sheppard, 55, of Bal Harbour, Florida, was convicted for submitting fraudulent COVID-19 relief loan applications and aggravated identity theft. 

According to the trial evidence, Sheppard devised a scheme to defraud private lenders and the Small Business Administration (SBA) by filing fraudulent loan applications for multiple companies under both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program.  The applications were supported by fabricated documents, including Employer’s Quarterly Tax Returns (IRS Form 941), and company tax returns.  In addition, Sheppard’s accountant’s signature was forged on the tax returns.  From May 2020 to March 2021, Sheppard obtained almost $900,000 in COVID-19 relief loans.

Sheppard was convicted by a jury on four counts of wire fraud, and two counts of aggravated identity theft.  Sheppard was acquitted of five counts of wire fraud and three counts of aggravated identity theft.  Sentencing is set for April 5, 2024.  Sheppard is facing a mandatory minimum term of two years in prison, that must run consecutive to any other sentence imposed, on the aggravated identity theft count(s), and up to 80 years in prison on the wire fraud counts, as well as restitution and forfeiture of the loan proceeds. 

U.S. Attorney Markenzy Lapointe for the Southern District of Florida and Special Agent in Charge Jeffrey B. Veltri of the FBI, Miami Field Office, announced the conviction.  Assistant U.S. Attorneys Aimee Jimenez and Ana Maria Martinez prosecuted the case.  Assistant U.S. Attorney Mitch Hyman is handling asset forfeiture.

In March 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted. It was designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through PPP. In April 2020 Congress authorized over $300 billion in additional PPP funding.

PPP funding allowed qualifying small businesses and other organizations to receive loans. PPP loan proceeds had to be used by businesses on payroll costs, interest on mortgages, rent, and utilities. PPP allowed the interest and principal on the loan to be forgiven if the business spent the loan proceeds on these expense items within a designated period of time, after receiving the proceeds, and used at least a certain percentage of the PPP loan proceeds on payroll expenses. 

Among other sources of relief, the CARES Act authorized and provided funding to the SBA to provide EIDLs to eligible small businesses, including sole proprietorships and independent contractors, experiencing substantial financial disruptions due to the COVID-19 pandemic to allow them to meet financial obligations and operating expenses that could otherwise have been met had the disaster not occurred.  EIDL applications were submitted directly to the SBA via the SBA’s on-line application website.  The applications were processed and the loans funded for qualifying applicants directly by the SBA.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

On Sept. 15, 2022, the Attorney General selected the Southern District of Florida’s U.S. Attorney’s Office to head one of three national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud.

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.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 22-cr-20290.

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