‘Fraudster’ bought $19,000 dump truck and booze with cash from COVID loan, feds say
A 40-year-old man in Virginia on probation for fraud and money laundering finagled nearly $200,000 in COVID-19 relief loans at the start of the pandemic last year, according to federal prosecutors.
Joseph Cherry was sentenced Thursday to just over 4 years in prison on charges of wire fraud and theft of government property after he pleaded guilty in October, the U.S. Attorney’s Office for the Eastern District of Virginia said in a news release.
“Exploiting programs meant to help businesses in need during a global pandemic is appalling,” Special Agent in Charge Kelly R. Jackson said in the release. “Today, Cherry learned his actions have repercussions.”
According to court documents, Cherry applied for an Economic Injury Disaster Loan on March 30 — three days after the Coronavirus Aid, Relief and Economic Security Act was signed into law.
The $2 trillion CARES Act provided the Small Business Administration with billions of dollars to fund the Paycheck Protection Program and Economic Injury Disaster Loan program for small businesses struggling to stay afloat during the pandemic.
Cherry submitted his first EIDL application for a business called “Global Concepts,” which did business as “Joes Tortured Sol,” prosecutors said in an indictment.
He listed the business address at a UPS store in a strip mall, according to the court indictment, and claimed it was a clothing store that employed three people. But he’s accused of not registering the company with the Virginia State Corporation Commission until April 8 — nine days after the loan application was submitted.
A loan for $197,000 was deposited in Cherry’s account on April 24, the indictment states.
That same day, prosecutors said, he withdrew $34,500 in cash and spent $296.77 at a local ABC liquor store. He then continued to make smaller cash withdrawals at ATMs and other branch locations throughout the day.
Cherry tried to take another $9,000 from the account the following day but was turned away, according to the indictment. When he returned later in the day, prosecutors said he was able to get a $70,000 cashier’s check and withdraw another $35,000 in cash.
“Cherry advised a bank teller he was purchasing houses at auction and would return to the branch the following day to obtain the remaining $56,000,” the indictment states.
He also applied for a second EIDL loan on April 3 as well as a PPP loan on April 5 for another nonexistent business, prosecutors said. Neither application appears to have been successful.
It wasn’t clear in court filings how investigators tracked Cherry down, but law enforcement executed a search warrant at his home on May 8. During the search, prosecutors said they found the $70,000 cashier’s check, the bill of sale and title for a $19,000 dump truck, roughly $13,000 in cash, and a forged business license.
Cherry was indicted at the end of May and pleaded guilty to some of the charges on Oct. 23, court documents show.
Prosecutors had pushed for a sentence near the top end of the recommended 41 to 51-month prison sentence, pointing to his criminal record.
Cherry was previously charged with fraud, money laundering and identity theft involving a $1.5 million scheme in 2009, prosecutors said. He was sentenced to more than nine years in prison, sent back for an additional three months and ultimately released in February 2019 with a lengthy period of supervised release.
He was still under court supervision when the alleged offenses occurred last year.
“The defendant has proven that he will take any opportunity to advantage himself by disadvantaging others,” prosecutors wrote in sentencing documents.
A defense attorney for Cherry had requested a sentence of just three years, pointing to issues with mental health and his willingness to accept responsibility and plead guilty “very early in the process.”
But the judge disagreed, sentencing Cherry at the top end of the recommended guidelines with three years of supervised release and ordering him to pay $57,303 in restitution, court filings show.
