A Memphis, Tennessee man was recently sentenced to federal prison in connection with his scheme to defraud the Paycheck Protection Program (PPP), a federal program intended to help small businesses survive the COVID-19 pandemic.
According to information presented in court, Herman Shaw, 44, used an accomplice to assist him in submitting a fraudulent PPP loan application in the name of “Freight Masters, Inc.,” his small trucking business, to a United States Small Business Administration (SBA) approved lending institution. The application contained numerous false statements, including false information about the number of persons Freight Masters employed.
Shaw received $782,212 in loan proceeds to be used for approved purposes such as paying his purported employees. Shaw, instead, used the loan proceeds to pay gambling debts and other personal expenses and to provide his accomplice with a $262,000 kickback, according to a statement from Reagan Fondren, acting United States attorney for the Western District of Tennessee.
On Aug. 2, Shaw pled guilty to a one-count information that charged him with wire fraud. United States District Court Judge Thomas L. Parker sentenced Shaw to 30 months in federal prison on Nov. 6. He was also ordered to pay restitution to the United States Small Business Administration in the amount of $782,212. There is no parole in the federal system.
Acting U.S. Attorney Fondren said “Individuals preying on the generosity provided by the Paycheck Protection Program stole money from U.S. taxpayers for personal gain without regard to the economic losses felt around the country. This sentencing reflects the severity of thefts from COVID-19 relief programs.
