Yakima, Wash. — Vanessa R. Waldref, the United States Attorney for the Eastern District of Washington, announced that 48-year-old Karla Padilla of Yakima, Wash., was charged this week with seven counts of fraudulently receiving aid funds for having received COVID-19. This indictment is the latest indictment resulting from the COVID-19 Relief Fraud Strike Force launched by the US Attorney’s Office earlier this year.
On March 27, 2020, the President signed into law the Coronavirus Relief, Relief and Economic Security (“CARES”) Act. The CARES Act provided a number of programs through which eligible small businesses could apply for and receive grants to help mitigate the economic impact of the pandemic on small and local businesses. One such program, the Paycheck Protection Program (PPP), provided government-backed small business loans that could be forgiven as long as the proceeds went toward payroll and other eligible expenses. Another program, the Economic Injury Disaster Loan (EIDL) program, provided low-interest loans that could be deferred until the end of the pandemic to provide “bridge financing” for small businesses to continue operating during the shutdowns and other economic circumstances caused by the pandemic. The PPP and EIDL programs have provided billions of dollars in aid, the vast majority of which have not been repaid, including hundreds of millions of dollars disbursed in eastern Washington.
“COVID-19 relief programs were designed to strengthen our community during the crisis and due to the number of people and businesses applying for funding, some deserving small businesses have not been able to obtain funding to keep their businesses afloat,” said US Attorney Waldref. “We formed the COVID-19 Fraud Strike Force because fighting pandemic-related fraud and holding those who have abused these programs accountable is critical to the strength and safety of our community in eastern Washington. The Strike Force works to ensure limited resources are used to protect our local small businesses and the critical jobs and services they provide to the community.”
In February 2022, U.S. Attorney Waldref and the United States Attorney’s Office (USAO) began working with federal law enforcement agencies to create and launch a COVID-19 Fraud Strike Force that would leverage interagency partnerships to combat fraud Aggressively investigating and pursuing COVID-19 relief programs in eastern Washington. The Strike Force consists of officials from the USAO, Small Business Administration (SBA), Office of Inspector General (OIG), Federal Bureau of Investigation (FBI), US Department of the Treasury Inspector General for Tax Administration (TIGTA), US Secret Service, US Homeland Security Investigations, US Department of Veterans Affairs OIG, General Services Administration OIG, Internal Revenue Service, Department of Energy OIG and others. Cases investigated and prosecuted by the Strike Force resulted in numerous indictments, criminal prosecutions, and civil penalties.
The indictment announced today alleges seven counts of fraud arising from an EIDL and two PPP loans that Padilla received in 2020 and 2021 on behalf of its alleged collector car business, identified as Queen B Collectibles. The indictment alleges that Queen B Collectibles was not a legitimate company, had no employees, receipts or operations, was not eligible for EIDL or PPP funding, and that Padilla provided false information to fraudulently obtain over $59,000 to obtain funding at EIDL and PPP. The indictment also alleges that Padilla unsuccessfully and fraudulently attempted to obtain four additional EIDLs for Queen B Collectibles that SBA failed to fund.
“I commend the excellent investigative work done by the Strike Force in these cases and in this case in particular by SBA OIG and TIGTA,” said US Attorney Waldref. “We will continue to work with our law enforcement partners to vigorously prosecute those who abuse and misuse COVID-19 aid funds and to strengthen our communities by protecting our small and local businesses.”
This case was investigated by the Eastern District of Washington COVID-19 Fraud Strike Force, with SBA OIG and TIGTA as lead investigators. This case is being prosecuted by Assistant US Attorney Tyler HL Tornabene, Assistant US Attorney Dan Fruchter and Assistant US Special Attorney Frieda K. Zimmerman.
An indictment is merely an allegation, and all accused are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.