DETROIT - Detroit resident Darrell Baker was sentenced to 24 months in federal prison on charges of bank fraud and money laundering arising out of a $590,000 Covid-19 fraud scheme, announced Acting United States Attorney Saima Mohsin.
Joining in the announcement were Special Agent in Charge Timothy Waters, Federal Bureau of Investigation and Inspector General Hannibal Mike Ware of the Small Business Administration’s Office of Inspector General.
Darrell Baker, 56, pleaded guilty in September, 2020 to one count of bank fraud arising from his effort to obtain some $590,000 by defrauding a Pennsylvania financial institution in the issuance of a “Paycheck Protection Program” (PPP) loan. Baker also pleaded guilty to one count of money laundering, the result of financial transactions he engaged in with the fraudulently obtained funds.
“Mr. Baker treated the PPP like his own personal bank account,” said Acting US Attorney Mohsin. “This defendant’s actions caused the diversion of essential funds earmarked for legitimate businesses suffering due to the COVID-19 pandemic for his own personal gain. We are committed to ensuring that anyone who takes advantage of the system will be prosecuted.”
"By illegally taking money from the Paycheck Protection Program, Mr. Baker harmed the owners and employees of small businesses struggling through the pandemic," said Timothy Waters, Special Agent in Charge of the FBI in Detroit. "The FBI is committed to working with our law enforcement partners to investigate and hold accountable anyone taking advantage of a global pandemic to line their own pockets."
Baker acknowledged in his plea agreement to applying for and obtaining a $590,000 PPP loan on behalf of a purported business that he owns, called “Motorcity Solar Energy, Inc.” The PPP is a program managed by the Small Business Administration (SBA) that provides loans to help businesses keep their workforces employed during the pandemic. The SBA forgives the loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The PPP loans are funded from participating banks, in this case Customers Bank in Pennsylvania.
Baker submitted paperwork with his loan application representing that Motorcity Solar Energy Inc. had 68 employees and, in 2019 paid wages, tips, and other compensation totaling $2.8 million. All of these representations were in fact false. Motor City Solar Energy had no employees, no payroll expenses of any kind, and was not an operational business. Baker submitted these false statements as part of a scheme to intentionally defraud Customers Bank.
Baker managed to withdraw approximately $172,000 of the $590,000 loan he obtained before Baker’s own financial institution froze the remainder, which was ultimately returned to Customer’s Bank. Baker used the funds he did obtain to purchase four cashier’s checks, and used the four checks to purchase two Cadillac Escalades, a Dodge Charger, and a Hummer. Mr. Baker was ordered to forfeit these vehicles. Baker was also ordered to pay a money judgment in the amount of $172,484.40, which represents the portion of the loan that Baker obtained before his fraud was uncovered and the balance of the loan frozen as well as pay restitutuion in the amount of $89,864..
The case was prosecuted by Assistant United States Attorney John K. Neal. The investigation was conducted jointly by the FBI and the SBA-OIG.
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.
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.
USAO - Michigan, Eastern;
Small Business Administration OIG