WASHINGTON D.C. — A D.C. man was arrested and charged with fraudulently obtaining more than $2.1 million in Paycheck Protection Program (“PPP”) loans and Economic Injury Disaster Loans (“EIDL”) on Tuesday, August 11.
Kenneth Gaughan, 41, of Washington, D.C., used the money he illegally received to purchase a $300,000 yacht, a $1.13 million rowhouse, and a $46,000 luxury sports sedan. He was also accused of stealing over $472,000 in funds from the Catholic Archdiocese of Washington, D.C. (“ADW”), where he was employed as Assistant Superintendent.
Gaughan was charged with one count of bank fraud, one count of the theft of government funds, one count of wire fraud, and one count of money laundering.
According to the U.S. Attorney’s Office, Gaughan received loans by applying to Small Business Administration lenders under companies that claim to “register emotional support animals.” The prosecutors said Gaughan made false representations to receive the loan funds, including forged paperwork and bank records.
“We will not tolerate exploitation of this national emergency for personal gain,” stated Acting U.S. Attorney Michael Sherwin. “This Office will not allow fraudsters to steal taxpayer money intended to help small businesses that are currently struggling as a result of the COVID-19 pandemic.”
In addition, Gaughan was alleged to persuade ADW to issue checks to pay for the fake invoices that were manufactured by himself, claiming to have the services for anti-bullying and crisis intervention programs, as well as for software used to send mass messages to ADW’s students and families. The 12-count indictment alleges that Gaughan converted the money to his personal use.
“Mr. Gaughan was so emboldened by deceiving a church for eight years he then, allegedly, turned his deception to the government,” said FBI Special Agent in Charge Jennifer Boone. “Stealing funds that were meant to be a lifeline for struggling businesses during an unprecedented economic downturn, and greedily using them to satisfy his own materialistic desires.”
The FBI, the U.S. Small Business Administration, Office of the Inspector General and the Internal Revenue Service-Criminal Investigation are still investigating the case.