Jury Finds Lexington Couple Guilty of Fraudulently Obtaining COVID Relief Loans

For Immediate Release

U.S. Attorney's Office, Eastern District of Kentucky
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LEXINGTON, Ky. – Two Lexington residents, Kelly Harris, 64, and Neal Harris, 57, were found guilty on Thursday, by a federal jury sitting in Lexington, following a four-day trial, of eight counts of wire fraud, for obtaining Economic Injury Disaster Loans loans under false pretenses.         

According to the evidence at trial, from May 5, 2020 through July 25, 2020, the Harrises submitted materially false applications to the Small Business Administration (SBA), to obtain Economic Injury Disaster Loans (EIDL), for five businesses they claimed were impacted by the COVID-19 pandemic.  They obtained $357,600 in disaster relief funds from the SBA for three of the businesses.  A local bank detected the fraud in August 2020 and returned the funds remaining in the business accounts.

“The pandemic had a destructive effect on countless businesses, which prompted Congress to appropriate public funds to help them stay open,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky.  “When such funds get dissipated through fraud, that has two results:  a theft of public funds and a shortcoming in the funds available to help those businesses who were supposed to receive it.  The diligence and dedication of the bank and our law enforcement partners realized this result, and will hold these defendants accountable for their disgraceful conduct.”      

United States Attorney Shier; Lesley Allison, Special Agent in Charge, United States Postal Inspection Service, Pittsburgh Field Division; and Kelly K. Moening, Special Agent in Charge, Treasury Inspector General for Tax Administration, Great Lakes Field Division, jointly announced the jury’s verdict.

The investigation was conducted by the USPIS and Treasury Inspector General for Tax Administration. This case is being prosecuted on behalf of the United States by Assistant U.S. Attorney Kate Smith.

The Harrises are scheduled to appear for sentencing on July 1, 2024.  They each face up to 20 years in prison. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal sentencing statutes before imposing a sentence. The Harris’ also face potential fines, a forfeiture money judgment, and a judgment of restitution, as ordered by the Court.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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https://www.justice.gov/usao-edky/pr/jury-finds-lexington-couple-guilty-fraudulently-obtaining-covid-relief-loans