U.S. Attorney’s Office in Chicago Joins DOJ Fraud Division, SBA, and SBA OIG in Announcing Enforcement Surge That Exceeded $245 Million in Covid-Related Loan Fraud

U.S. Attorney’s Office in Chicago Joins DOJ Fraud Division, SBA, and SBA OIG in Announcing Enforcement Surge That Exceeded $245 Million in Covid-Related Loan Fraud

 

Two-month national takedown involved 40 U.S. Attorney’s Offices and 20 federal and state investigative agencies

 

CHICAGO — Andrew S. Boutros, United States Attorney for the Northern District of Illinois, today announced a criminal indictment and a guilty plea as part of a nationwide enforcement action led by the Justice Department’s National Fraud Enforcement Division, the Small Business Administration, and the SBA Office of Inspector General targeting fraud in the SBA’s Paycheck Protection Program (PPP).

From June 12, 2026, to Sept. 1, 2026, federal prosecutors across the country facilitated fraud enforcement actions spanning more than 160 criminal defendants, including approximately 80 newly charged defendants, reaching approximately $245 million in intended loss to American taxpayers.  Consistent with the Administration’s priorities to identify, investigate, and prosecute criminal fraud in the federal government entitlement and benefit programs, the Chicago U.S. Attorney’s Office for the past year and a half has been taking a fresh look at Covid-related fraud.

“Pandemic loan relief was meant to keep American small businesses alive during government lockdowns—not line the pockets of fraudsters,” said Attorney General Todd Blanche.  “The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications—but they will now be prosecuted to the fullest extent of the law.”

“This summer surge shows what is possible when dedicated public servants across the country work together with a single purpose,” said Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division.  “Our mission is clear: protect taxpayer funds, safeguard the integrity of federal relief programs, and deliver justice to those who exploited them.  We will remain steadfast every day—standing shoulder-to-shoulder with our partners—to identify fraud, pursue those responsible, and restore confidence in the programs meant to help American small businesses thrive.”

“When individuals exploit government programs for personal gain, they do more than steal taxpayer dollars—they undermine public trust and divert resources from the people who need them the most,” said U.S. Attorney Boutros.  “Prosecuting Covid related fraud is an important way to preserve the integrity of government assistance programs and ensure that relief funds reach their intended recipients.  The Chicago U.S. Attorney’s Office is committed to holding accountable those who sought to profit from the pandemic, protecting both taxpayers and the vital institutions that support our communities.”

“Today’s announcement represents the largest-ever action against perpetrators of SBA fraud, with 870,000 suspended borrowers tied to $39 billion in suspected fraudulent PPP and Covid EIDL activity,” said SBA Administrator Kelly Loeffler.  “In partnership with Vice President Vance and the White House Task Force to Eliminate Fraud, we’re putting fraudsters on notice: the federal government will no longer turn a blind eye to those who stole from taxpayers and exploited programs designed to sustain small businesses during the pandemic.  With demand letters going out to suspected fraudsters, we’re also sending a clear message that they must repay their debts or face Treasury collections and possible federal law enforcement.  Under this Administration, the free ride is over.  We are restoring accountability, recovering taxpayer dollars, and protecting SBA programs for the legitimate small businesses they were created to serve.”

“Operation No Doze brings a focused and coordinated approach to pursuing fraud in SBA’s pandemic relief programs,” said SBA Inspector General William Kirk.  “By concentrating our investigative resources and working closely with SBA and our law enforcement partners, we are strengthening our ability to identify fraud, recover taxpayer funds, and hold accountable those who exploited programs created to help small businesses in a time of extraordinary need.  This initiative makes clear that the passage of time does not diminish our commitment to accountability.”

In the Northern District of Illinois, COSETTE DEAL, 37, of Oak Park, Ill., was indicted on federal wire fraud charges.  The indictment accuses Deal of submitting fraudulent PPP loan applications on behalf of businesses purportedly owned and operated by Deal and others, including purported sole proprietorships in the performing arts.  The applications contained materially false statements and misrepresentations concerning, among other things, the purported entities’ number of employees, gross income, payroll, and existence of ongoing operations, the indictment states.  Deal allegedly caused a loss of at least approximately $440,000.  Deal has pleaded not guilty to the charges and is awaiting trial.  Assistant U.S. Attorney Edward A. Liva, Jr. of the Northern District of Illinois is prosecuting the case.  The public is reminded that an indictment contains only charges and is not evidence of guilt.  Deal is presumed innocent until proven guilty beyond a reasonable doubt.

In another case in the Northern District of Illinois, WILLIAM FREDERICK REED, of Hazel Crest, Ill., pleaded guilty to false statement and tax offenses.  Reed admitted in a plea agreement that he submitted fraudulent PPP loans on behalf of his sole proprietorship, Off Duty Security.  Among other things, Reed falsified his business’s payroll numbers, gross receipts, and net profits so that the business would appear as eligible to receive PPP loans, even though Reed knew it would otherwise not have been eligible.  Reed caused a loss of $17,584.  Reed’s sentencing hearing has not yet been scheduled.  Assistant U.S. Attorneys Hayley Altabef and Elie Zenner of the Northern District of Illinois are prosecuting the case.

On April 7, 2026, the Department of Justice announced the creation of the National Fraud Enforcement Division.  The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people.  The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.  In the Northern District of Illinois, Assistant U.S. Attorney Vincenza Tomlinson serves as District Fraud Counsel for the Fraud Division.

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