N.C. Man Accused of Using Fake Tax Documents to Get More Than $400K in COVID Relief Funding

A North Carolina man has been accused of fraudulently obtaining more than $400,000 in federal COVID-19 relief funding, the U.S. Department of Justice (DOJ) announced this week.

David Redfern, a 31-year-old man from Trinity, North Carolina, was identified as the alleged fraudster in a criminal complaint that the DOJ unsealed on Tuesday. Redfern has been accused of getting more than $412,000 in loans from the U.S. Small Business Administration that were intended for small business owners struggling during the coronavirus pandemic, according to a DOJ news release.

Redfern was arrested Tuesday morning and faces one count each of wire fraud and bank fraud, the release said.

According to the criminal complaint, Redfern applied for a Paycheck Protection Program (PPP) loan and two Economic Injury Disaster Loans (EIDLs) between April and June through a business he started in January called Wilder Effects LLC. The federal government set aside money for both loan types as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which President Donald Trump signed into law in late March. While the PPP closed to new applicants earlier this month, the EIDL was still open to new applications from small business owners in late August.

The SBA approved Redfern for one EIDL loan worth $2,000 in mid-June but rejected his second EIDL loan application, the complaint alleges. Public records show that the SBA also approved Wilder Effects LLC for a PPP loan worth at least $350,000 on June 1.

The criminal complaint alleges that Redfern applied for the PPP loan using fake documents, which included false Internal Revenue Service tax documentation alleging that the company employed 20 people.

"In reality the IRS has no record of such a filing," the DOJ said.

After receiving the loans, the complaint said Redfern allegedly transferred some of the money to his own bank account and also made cash withdrawals. His actions raised suspicions of fraud at his bank, which then froze the LLC's account. Most of the loan money—about $402,000—was retrieved, the DOJ said.

Redfern is one of many American citizens to be charged with fraud in connection to pandemic loans meant for struggling businesses. Last week, the DOJ accused a man in Minnesota of falsifying company documents for his PPP loan application to obtain more than $840,000, and a woman from Nevada faced similar charges in pursuing $600,000 in PPP loans earlier this month. At least two men—one in Texas and another in Florida—have been accused of using fraudulently-obtained COVID-19 funds to purchase Lamborghinis, according to the DOJ.

Newsweek reached out to the Department of Justice for comment but did not receive a response in time for publication.