COVID-19 Relief Fraud: New Jersey Business Owner Pleads Guilty to $200,000 Scheme
A New Jersey businesswoman has admitted to defrauding COVID-19 relief programs of nearly $200,000, diverting the funds for personal gain. Damaris Valerio, 42, of Perth Amboy, pleaded guilty to one count each of wire fraud and money laundering before U.S.District Court Judge Robert Kirsch.
The Scope of COVID-19 Relief Fraud
Valerio’s case is a stark example of the widespread fraud that plagued the COVID-19 relief programs designed to support struggling businesses and individuals during the pandemic.Estimates from the Government Accountability Office suggest that at least $100 billion in pandemic relief funds were improperly obtained, with fraud being a notable contributor. This includes schemes involving the Economic Injury disaster Loan (EIDL) program, the Paycheck Protection Program (PPP), and pandemic unemployment insurance.
How the Scheme Unfolded
Between April 2020 and December 2021, Valerio, owner and operator of La Vogue House of Beauty, fraudulently obtained funds by submitting falsified documentation. She inflated her business’s revenue, payroll expenses, and employee count to qualify for larger loan amounts and benefits. Specifically,she claimed to employ 15 individuals when her business typically had between five and seven employees.
The funds were intended to help businesses maintain payroll and cover essential expenses during mandated shutdowns and economic hardship. Valerio’s actions directly undermined the purpose of these programs, diverting resources from legitimate businesses in need.
Misuse of Funds: From Mortgage Payments to Cryptocurrency
Upon receiving the illicit funds, Valerio did not use them to support her business or employees. Rather, she engaged in a pattern of personal financial enrichment. The U.S. Attorney’s Office reports that she used the money to:
Pay off her home mortgage: Directly benefiting her personal finances.
Invest in Cryptocurrency: A growing trend in illicit fund concealment, leveraging the relative anonymity of digital currencies.
Gift to a Relative: Further diverting funds from their intended purpose.
Fund Vehicle Purchases: Acquiring multiple vehicles for personal use.
* Finance Property Renovations: Investing in a property she subsequently sold for profit.
potential Penalties and Sentencing
Valerio faces significant consequences for her actions. The wire fraud charge carries a potential sentence of up to 20 years in prison and a fine of up to $250,000. The money laundering charge carries a potential sentence of up to 10 years in prison and a fine of up to $250,000. Her sentencing is currently scheduled for October 28th.
This case serves as a reminder of the government’s ongoing efforts to investigate and prosecute individuals who exploited the COVID-19 pandemic for personal financial gain. The Department of Justice continues to prioritize these cases, aiming to recover stolen funds and hold perpetrators accountable.