COVID-19 $1.5M fraud scheme leads to prison time for 2 North Carolina women: DOJ

WILMINGTON, N.C. (WTVD) -- A Zebulon woman was sentenced Thursday to eight years in prison for her role in a multi-million-dollar COVID-19 fraud scheme, the US Department of Justice (DOJ) said Friday.

Loretta Clarice James, 49, had previously pleaded guilty to conspiracy to commit wire fraud on May 29, 2024. One of her co-conspirators, Lakesha Bowles, 43, was sentenced on April 24 to 30 months in prison for her role in the scheme.

Both women were also ordered to repay more than $1 million in restitution for crimes that included "hundreds of victims.".

"This investigation began following several complaints from Wake County residents regarding identity theft and fraud," said Wake County Sheriff Willie Rowe. "Over the course of nearly a year, a thorough investigation led to multiple arrests, supported by the NCDMV License and Theft, Clayton Police Department, U.S. Department of Homeland Security, and the IRS Criminal Investigations. The investigators involved demonstrated exceptional diligence in pursuing the suspects and uncovering a vast network of crimes. Their efforts resulted in identifying hundreds of victims, not only in Wake County, but across North Carolina, and uncovering hundreds of thousands of dollars in fraud. I would like to commend the investigators for their tireless work and unwavering commitment to serving the residents of our county and state."

According to court evidence, James and Bowles conspired to commit wire fraud by submitting fraudulent loan applications to the Paycheck Protection Program (PPP), which was established by Congress to support small businesses during the economic havoc caused by the pandemic response.

The DOJ says James inflated payroll numbers and asked for funding on behalf of dormant businesses or ones that didn't exist. James and Bowles submitted loan applications in their names and on behalf of others whom they recruited. The two women then got a cut when third parties received loan money.

James also conspired to commit wire fraud by submitting fake loan and grant applications to the Economic Injury Disaster Loan (EIDL) Program and the Restaurant Revitalization Fund (RRF) Program. The DOJ said she submitted EIDL applications for businesses that did not exist and for salaries of employees who didn't either. She submitted several hundred fraudulent EIDL applications and got more than $500,000 in fraudulent EIDL disbursements.

In all, James, Bowles, and other co-conspirators got more than $1.5 million in COVID-19 loans with this scheme. Darnell William King, of Clayton, who conspired with both women, pleaded guilty to PPP fraud and identity theft charges on March 11.

"The defendants conspired to take advantage of critical aid programs intended to provide relief for businesses affected during the pandemic by fraudulently applying for and obtaining COVID-19 program funds," said Special Agent in Charge Donald "Trey" Eakins, Charlotte Field Office, IRS Criminal Investigation. "(We) will continue to work alongside our law enforcement partners to pursue individuals who try to exploit federal relief programs for their personal gain."

Stay on top of breaking news stories with the ABC11 News App

But apparently that wasn't enough for James. The DOJ said she was also embroiled in an identity-theft plot scheme where she and others used stolen IDs to get loans or personal lines of credit from private lenders.

SEE ALSO | Raleigh businessman pleads guilty to million-dollar COVID relief fraud

Her main role in that scheme was getting Social Security numbers of people with good credit, completing a loan application in that person's name, and forging documents and email accounts to get loans.

Those running the scheme would then hire "mules" to go to the lenders and pick up the money. The DOJ said James and her cohorts did this "over and over again," with loans that ranged from $5,000 to $10,000, none of which was ever paid back.

"This office is committed to holding accountable those who exploited a national crisis and the hardships of others for their personal gain and greed. Public relief funds were created to support hardworking individuals and small businesses during times of crisis-not to line the pockets of criminals," said Acting U.S. Attorney Daniel P. Bubar. "We will continue to work diligently with our many state and federal partners to pursue justice for those who choose to abuse public trust by lying, cheating, and stealing resources that are meant to support our community in its greatest time of need."

SEE ALSO | Former NC State player Quentin Jackson gets 7 years in prison over COVID-19 relief fraud