Judge orders Wake County women to serve time, pay millions for loan and bank fraud
A Wake County woman will serve eight years in prison and pay over $1.9 million for her part in defrauding a federal small business loan program during the COVID-19 pandemic.
Loretta Clarice James, 49, of Zebulon, pleaded guilty last year to conspiracy to commit wire fraud. Chief U.S. District Judge Richard E. Myers II sentenced her to prison and five years supervised probation Thursday in U.S. District Court for the Eastern District of North Carolina.
Two co-defendants were sentenced earlier this year, according to a news release. Lakesha Bowles, 43, of Raleigh, was sentenced on April 24 for her role in the conspiracy, and on March 11, Darnell William King pleaded guilty to conspiracy to commit wire fraud and bank fraud, aggravated identity theft, and possession of a firearm by a convicted felon, court records show.
Bowles received 30 months in prison and three years of supervised probation, including 12 months of home detention, after pleading guilty in January to conspiracy to commit wire fraud affecting a financial institution. She was ordered to repay nearly $1.5 million.
King, 42, of Clayton, could be sentenced at a June 10 hearing in a Wilmington federal courtroom.
James also has several cases pending in Wake County Superior Court, where she is accused of 12 counts of obtaining property by false pretenses, 18 counts of identity theft, 16 counts of conspiracy to obtain property by false pretenses, four counts of attempting to obtain property by false pretenses, 17 counts of felony conspiracy to commit identity theft, and one count of trafficking in stolen identities, records show.
“This office is committed to holding accountable those who exploited a national crisis and the hardships of others for their personal gain and greed,” acting U.S. Attorney Daniel Bubar said. “Public relief funds were created to support hardworking individuals and small businesses during times of crisis — not to line the pockets of criminals.”
Loan fraud, stolen identities and theft
Court records show the women were accused of submitting fraudulent loan applications, under their own names and the names of others they recruited, to the federal Paycheck Protection Program. The U.S. Small Business Association loan program supported small businesses affected by economic uncertainty and layoffs during the pandemic.
The fraudulent applications inflated payroll numbers and named dormant or nonexistent businesses, the release said. The women were paid when the third-party loans were approved.
James was also accused of submitting several hundred fraudulent loan and grant applications to the Economic Injury Disaster Loan Program and the Restaurant Revitalization Fund Program under her name and under the names of relatives, friends and associates, the release said.
The businesses and the employees listed in the applications did not exist, it said. James was accused of receiving more than $500,000 from the EIDL program.
James, Bowles and other co-conspirators fraudulently obtained over $1.5 million in COVID-19 loans, the news release said.
They also were accused of using stolen identities to get loans or personal lines of credit from private lenders, it said. Court records show James was accused of acquiring Social Security numbers belonging to people with good credit and using forged documents and email accounts to submit loan applications to banks and other lenders.
She and others then hired “mules,” providing them with the fake identification necessary to pick up the money once the loans were approved, it said. The mules would give the money to James and others, receiving $100 to $2,000 from each loan as payment.
None of the loans, which ranged from $5,000 to $10,000, were repaid, the release said.
The local investigation started when several Wake County residents filed reports with law enforcement about identity theft and fraud. The Clayton Police Department, Wake County Sheriff’s Office and other state and federal agencies investigated, identifying hundreds of victims across the state, Wake County Sheriff Willie Rowe said.
The probe became part of the national “Operation Overload” investigation that uncovered “a sophisticated criminal enterprise that fraudulently utilized thousands of North Carolina licenses, resulting in financial crimes that impacted individuals across multiple states,” according to Capt. Talaya Vaughn, with the N.C. DMV License and Theft Bureau.
