Kentucky Woman Sentenced in Over $1 Million COVID-19 Relief Fraud and Money Laundering Scheme
LONDON, Ky. – Nicole Pennington, 50, of London, Kentucky, was sentenced to 44 months in federal prison on Tuesday, March 18, 2026, for wire fraud and conspiracy to commit money laundering. The sentencing was handed down by U.S. District Judge Claria Horn Boom, according to court records and announcements from the Department of Justice .
Details of the Fraudulent Scheme
Pennington pleaded guilty to defrauding the government through fraudulent applications for Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans, administered by the Small Business Administration (SBA) in response to the COVID-19 pandemic . From March 2020 through May 2022, she devised a scheme to submit materially false information on these applications .
Investigators found that Pennington submitted approximately 30 applications linked to both legitimate and fabricated businesses connected to herself and her husband, Joshua Pennington. These applications were supported by fraudulent tax returns, financial statements, and other falsified records .
Six of the applications were ultimately approved, resulting in a total of $1,090,398.35 in fraudulently obtained SBA loan proceeds .
Laundering of Funds
Following the receipt of the loan funds, Nicole Pennington and Joshua Pennington conspired to launder over $1,000,000 in criminal proceeds through transactions exceeding $10,000 . The funds were used for personal expenses, including:
- Kitchen renovations
- Plastic surgery
- A Viking River Cruise
- Cash withdrawals
- Vehicle purchases
- Payment of loans and mortgages
Previous Sentencing of Co-Defendant
Joshua Pennington, Nicole Pennington’s co-defendant, was previously sentenced on October 17, 2025, to 22 months in prison for his role in the conspiracy to commit money laundering . He must serve 85% of his sentence and will be under supervised release for two years following his release from prison .
Investigation and Prosecution
The investigation was jointly conducted by IRS-Criminal Investigations and the Treasury Inspector General for Tax Administration . Assistant U.S. Attorney Brittany Dunn-Pirio is prosecuting the case on behalf of the United States .