Shannon T. Hanson Acting United States Attorney for the District of Delaware | U.S. Attorney for the District of Delaware
Carnell Ragan, a 59-year-old resident of Philadelphia, has been sentenced to three years in federal prison for his role in a scheme involving the filing of false tax forms related to the Employee Retention Credit (ERC). In addition to the prison term, Ragan was ordered to pay more than $1.6 million in restitution to the Internal Revenue Service (IRS). The sentence was handed down by Chief U.S. District Judge Colm F. Connolly.
The ERC was established by Congress as part of emergency financial assistance measures during the COVID-19 pandemic. The program initially provided a 50% credit on up to $10,000 in wages per employee for businesses that were closed due to government orders or experienced significant drops in revenue. By 2021, this credit increased to 70% per employee per quarter.
Court documents show that Ragan recruited over 20 individuals who owned business entities not eligible for the ERC because their businesses were either non-operational or did not have paid employees during the pandemic. Despite knowing these entities were not entitled to claim ERC funds, Ragan used their information to file false IRS Forms 941 and sought over $20 million in credits from the IRS. As a result of these filings, the IRS issued checks totaling more than $1.6 million, including over $800,000 sent to a Delaware-registered business that did not qualify for such relief.
U.S. Attorney Julianne E. Murray commented: “Ragan took advantage of pandemic relief funds that were intended to help those harmed most by the pandemic. He shamelessly enriched himself and his friends at the expense of the American taxpayer. My office and our law enforcement partners will continue to investigate and hold responsible all those who stole COVID-19 pandemic relief funds that were intended to help hard working Americans cope with the financial fallout from the pandemic.”
Yury Kruty, Special Agent in Charge at IRS Criminal Investigation’s Philadelphia Field Office added: "Today's sentencing is a strong reminder that those who find ways to fraudulently benefit from government programs meant to help struggling businesses will be brought to justice," said Yury Kruty, Special Agent in Charge, Philadelphia Field office, IRS Criminal Investigation. "Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable."
The investigation was conducted by IRS-Criminal Investigation and prosecuted by Assistant U.S. Attorney Jesse S. Wenger.
Additional details about this case can be found on the website of the U.S. Attorney’s Office for the District of Delaware. Related court documents are available through both the District Court for the District of Delaware and PACER under Case No. 25-CR-0009-CFC.
