Thursday, November 14, 2024

Defendant Stole $844,000 in Pandemic Paycheck Protection Program (PPP) Funds

            WASHINGTON – Wendy Nicole Villatoro, 40, formerly of Washington, D.C., pleaded guilty today to one count of bank fraud, for a scheme to submit fraudulent applications seeking money from the Paycheck Protection Program (PPP) that netted her $844,000.

            The plea was announced by U.S. Attorney Matthew M. Graves, Special Agent in Charge Charmeka Parker of the U.S. Department of Agriculture - Office of Inspector General (USDA OIG) Northeast Region, and Special Agent in Charge Amaleka McCall-Brathwaite of the U.S. Small Business Administration, Office of the Inspector General (SBA-OIG), Eastern Region.

            Villatoro, a former D.C. Homeland Security Commissioner and current employee with the U.S. Department of Agriculture, pleaded guilty to bank fraud in the U.S. District Court for the District of Columbia. The Honorable Carl J. Nichols scheduled a sentencing hearing for February 28, 2025.

            According to the government’s evidence, between March 31, 2020, and August 4, 2021, Villatoro submitted eight PPP loan applications with various financial institutions and 15 Economic Injury Disaster (EID) loans with the Small Business Administration (SBA), all of which contained materially false statements. In order to get money from PPP lenders or the SBA,             

            Villatoro submitted loans on behalf of fake businesses and inflated the number of employees, the average monthly payroll, the gross yearly revenue, or the cost of goods sold. In doing so, she tried to steal between $2.6 million and $5.5 million. While most of Villatoro’s loan applications were denied, she successfully secured over $844,000 in PPP and EID funds. Villatoro used the funds to pay off her student loans, pay off the car loan on a BMW SUV, and buy luxury items.

            Villatoro faces a maximum sentence of 30 years in prison and a fine of not more than $1,000,000. The statutory sentences for federal offenses are prescribed by Congress and are provided here for informational purposes. Any sentence will be determined by the Court based on the advisory Sentencing Guidelines and other statutory factors.

            As part of her plea agreement, Villatoro has agreed to pay $844,415.24 in restitution to the U.S. Government and to forfeit items purchased with proceeds of the offense, including over 70 pieces of designer clothing and jewelry and a BMW SUV.

            The CARES Act is a federal law enacted on March 29, 2020, 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 the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

            The PPP allowed qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds were required be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allowed the interest and principal on the PPP 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.

            The EIDL program was designed to provide economic relief to small businesses that were experiencing a temporary loss of revenue. EIDL proceeds were intended for a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities and fixed debt payments. If an applicant also obtained a loan under the PPP, the EIDL funds were not to be used for the same purpose as the PPP funds.   

            The case was investigated jointly by U.S. Attorney’s Office for the District of Columbia, USDA-OIG, and SBA-OIG. Valuable assistance was provided by the FBI’s Washington Field Office Asset Forfeiture Unit. In announcing the plea, U.S. Attorney Graves commended the work of those who investigated the case from USDA-OIG and SBA-OIG.

            “This investigation and prosecution should send a strong zero-tolerance message to those individuals, especially government employees, who explicitly apply for aid to exploit taxpayer funded pandemic relief programs,” said USDA-OIG Special Agent in Charge Charmeka Parker. “We appreciate the partnership with our federal partners in pursuing this type of fraud and holding these bad actors to account in this great time of need.”

            “This is a case of an individual exploiting pandemic relief programs for personal gain, diverting critical funds meant to help small businesses in need,” said SBA-OIG’s Eastern Region Special Agent in Charge Amaleka McCall-Braithwaite. “Our office remains committed to holding accountable those who engage in fraud and abuse these vital resources. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their tireless efforts in bringing this case to justice.”

            This matter was prosecuted by Assistant U.S. Attorneys Jared English, Paul V. Courtney, Connor Mullin, Anna Forgie, and Rick Blaylock, Jr.

            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 Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.