Man given nearly 5 years in prison for COVID-19 relief fraud

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MILWAUKEE (AP) — A Pewaukee businessman has been sentenced to nearly five years in prison for fraudulently obtaining more than $1 million in federal coronavirus relief funding meant for struggling businesses.

According to prosecutors, Thomas Smith, 47, involved seven other people, including his brother, in a scheme to get federal funding for phantom companies.

U.S. District Judge Brett Ludwig told Smith Wednesday that he hopes a 57-month prison sentence and two years of supervision would let him get back on track as a contributing member of society, the Journal Sentinel reported.

Ludwig also ordered Smith to repay the money he obtained through the federal Paycheck Protection Program, which offered businesses forgivable loans if used for payroll, rent, utilities and other specific expenses.

“You took advantage of our nation’s generosity,” Ludwig said, and undercut public trust in government.

All the PPP applications, their proceeds and kickbacks to Smith ran through his bank, which got suspicious last summer and froze several accounts.

“The federal government should be able to provide emergency funds like PPP loans to the deserving public without having to feel constrained by possible fraudsters who seek to profit from the national disaster,” federal fraud prosecutors wrote in a sentencing memo.

All eight defendants were charged last year and entered guilty pleas to either bank fraud or making false statements. The remaining defendants are scheduled for sentencing in the coming days and weeks.