David Clay Fowlkes, U.S. Attorney | U.S. Attorney for the Western District of Arkansas
A Florida couple, who previously resided in Northwest Arkansas, admitted guilt in a court proceeding on Monday to their involvement in defrauding Pandemic Relief Loan Programs. Presiding over the hearing, U.S. District Judge Timothy L. Brooks accepted the pleas from Fawaad Welch and Julia Youngblood, both 41, who waived indictment and entered guilty pleas to criminal information charges. Welch admitted to wire fraud, while Youngblood acknowledged misprision of a felony, all in connection to the fraud scheme.
Court documents and statements illustrate that from May 2020 to October 2021, the couple engaged in fraudulent loan applications for their business, Slipstream Creative, LLC, based in Fayetteville, Arkansas. Welch reportedly provided false information to lenders about the company's assets, liabilities, and use of funds across various relief programs including SBA7(a), Economic Injury Disaster Loan, and Main Street Loan Programs. Youngblood signed the applications, which did not disclose significant details such as tax liabilities and concurrent loans from other programs. The government has reported that, after obtaining $1.5 million in Economic Injury Disaster Loan funds, Welch transferred $1.3 million to the couple's bank account, using $445,000 to purchase a home in Florida.
Further investigation revealed that Welch assured Generations Bank officials of appropriate salary distribution, claiming, “Yes sir we do at 10k a month so all is good there. 5k a piece.” However, upon receipt of $3 million in funds, Welch transferred $950,000 from the Main Street Loan Program to himself within a month.
The plea agreements propose the couple bears responsibility for an intended loss falling between $3.5 million and $9.0 million. Sentencing will occur following a presentence investigation by the U.S. Probation Office, with Welch facing a potential maximum of 20 years in prison and Youngblood up to 3 years. Both defendants may also face supervised release, financial penalties, and restitution. Judge Brooks will finalize their sentences by taking into account the U.S. Sentencing Guidelines and relevant legal factors.
United States Attorney David Clay Fowlkes confirmed the couple's forthcoming change of plea hearing. The FBI, along with the Office of Inspector General for the Federal Reserve Board, the Consumer Financial Protection Bureau, and the Special Inspector General for Pandemic Relief, conducted the investigation. The case is being prosecuted by U.S. Attorney Fowlkes and Assistant U.S. Attorney Ben Wulff.
The Fraud Section spearheads prosecutions concerning fraud within the Paycheck Protection Program (PPP), having charged over 150 individuals in more than 95 cases since the introduction of the CARES Act. The efforts have resulted in the seizure of over $75 million in cash and numerous assets wrongfully acquired through PPP fraud.
More details can be accessed at Justice.gov/OPA/pr/justice-department-takes-action-against-covid-19-fraud.
