An East Granby woman has been sentenced to three years of probation for defrauding COVID-19 pandemic relief programs out of more than $1.1 million. U.S. District Judge Sarah F. Russell in New Haven ordered Karen Gaston, 45, to serve four weekends in jail, 10 months of home detention, and complete 500 hours of community service.
The sentencing follows an investigation into Gaston's activities during the early stages of the COVID-19 pandemic, when Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The CARES Act was designed to provide emergency financial assistance through initiatives such as the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDLs), which were intended to help small businesses cover payroll and operating expenses.
According to court documents and statements made in court, Gaston controlled several entities including LNK, Elegant Clinical, Ruby Red LLC, and Diamond Shine LLC. While some of these businesses were operational or shared resources and employees, others had limited or no activity. Beginning around April 2020, Gaston submitted loan applications with false information about her companies’ operations and workforce. She also applied for loans at multiple financial institutions to hide her fraudulent actions.
Prosecutors said that Gaston's applications misrepresented her businesses as active concerns with inflated employee numbers and wages paid. The applications included fake tax returns and documents; one application falsely named a family member as a part owner. At least one loan application was filed after she had already been arrested on state charges related to Medicaid fraud.
Gaston ultimately received $1,163,910 from PPP and EIDL funds through this scheme but used the money for personal expenses such as cars, travel, food, luxury home goods, jewelry—including a ring purchased from Harry Winston for $39,521.63—and paying off her mortgage.
Judge Russell ordered full restitution from Gaston along with forfeiture of the expensive ring.
On June 12, 2025 Gaston pleaded guilty to wire fraud and making illegal monetary transactions.
The Internal Revenue Service’s Criminal Investigation Division led the investigation. Assistant U.S. Attorney Michael S. McGarry prosecuted the case.
“Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form,” according to officials.
