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(CNN) –– As millions struggle to stay afloat during the covid-19 pandemic, the least important purchases in most minds are Louis Vuitton and diamonds.
But in North Carolina whose unemployment rate was 6.5% last August, a woman allegedly used her $ 149,000 covid-19 relief loan to buy products at places like Louis Vuitton, Nordstrom, Neiman Marcus, IKEA and various diamond stores.
Jasmine Johnnae Clifton, 24, of Charlotte, appeared in federal court this week. She is charged with two counts of fraud for using a business already dissolved to obtain funds for covid-19 relief, according to a release of the United States Attorney for the Western District of North Carolina.
The loan was part of the CARES Act Disaster Economic Damage Loan Program. The funds were provided by the US Small Business Administration (SBA) to small businesses in North Carolina that “suffered substantial economic damage” due to the pandemic, said a agency press release.
Clifton did not respond to requests from CNN for comment. His public defender declined to comment due to the pending status of the case.
Indictment: Covid aid loan was for a business that no longer existed
Clifton filed the documents to create the Jazzy Jas LLC online clothing business for the first time in February 2019, according to the indictment obtained by CNN. Then, he applied for the SBA loan for the company on July 24, 2020, according to the file.
The problem? According to the indictment, the company no longer existed at that time. It had been formally dissolved with the North Carolina secretary of state months earlier in March 2020. However, effectively, it was dissolved in September 2019.
To obtain the funds, Clifton allegedly submitted a loan application on July 24, 2020. In which he allegedly falsely claimed that Jazzy Jas LLC had generated $ 350,000 in revenue over a 12-month period prior to the pandemic. , according to the indictment.
“CLIFTON specifically agreed to use the proceeds of the loan for Jazzy Jas LLC ‘solely as working capital to alleviate the economic damage caused by the disaster that began to occur on January 31, 2020,” the document reads.
A loan of $ 150,000 was approved on August 8, 2020. The indictment notes that these funds, less a fee of $ 100, were deposited into the Clifton credit union account about three days later.
Fraud charges
From the time to the indictment, Clifton used the previous existence of Jazzy Jas LLC to “exploit a federal loan program and obtain a substantial sum of money.” The federal government seized approximately $ 50,000 in funds from the Clifton credit union account in November, according to the record.
On February 17, a grand jury indicted Clifton for the first time on two counts. On the one hand, wire fraud in relation to a disaster benefit and fraud in relation to a major disaster or emergency benefits. If convicted, the press release indicated that the charges could carry a maximum of 30 years in prison each. Also a total of US $ 1,250,000 in fines.
Clifton was released on $ 25,000 bond after he appeared in court Monday, court records said.
Prosecutor wants covid-19 funds to help the right people
Small businesses have struggled to continue operating during the pandemic. More than 74% of small businesses reported experiencing either a moderate overall negative effect or a large negative effect due to COVID-19. This is recorded by the most recent data available from the Small Business Pulse Survey from the US Census Bureau., taken the week of January 4 to January 10, 2021.
“At a time when our nation is grappling with the effects of the coronavirus pandemic and businesses are struggling to cope with the impact of covid-19, scammers are seizing the opportunity to steal federal financial aid programs to line their own pockets,” US Attorney Andrew Murray wrote in a statement sent to CNN.
“My office works hard to uncover criminals who are trying to exploit the pandemic and steal funds intended for the economic recovery of businesses and communities throughout the Western District of North Carolina,” he completed.
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