Here’s one way in which COVID-19 relief aid allegedly went up in smoke.
A pair of Missouri men have been charged with stealing $1.25 million in payroll protection loans to start a trucking firm whose vehicles they modified in a way so they spewed out hundreds of times more pollution.
Christopher Carroll and George Reed had allegedly applied for the loans to help employees of a timeshare-exit company they ran called the Square One Group. But instead of using the money to keep employees on the payroll as intended, federal prosecutors say the men used the cash to start a trucking business and buy a fleet of 30 diesel-powered trucks.
As part of the trucking business, the men allegedly created a company called Whiskey Dix Big Truck Repair in Bourbon, Mo., which they used to tamper with their fleet to remove legally-mandated emission control systems.
Some believe the control systems inhibit a truck’s performance and make it more costly to operate. Removing the systems, however, can result in trucks producing 300 times more pollution than allowed, the Environmental Protection Agency says.
Carroll and Reed were initially charged in 2021 with stealing the COVID-19 relief aid, but had an additional charge of violating the Clean Air Act for tampering with their trucks added this week.
James G. Martin, a lawyer for Carroll, said the government decided to bring the extra charges less than a week before his client was set to begin trial in the PPP fraud case.
“We’re extremely disappointed they included the alleged EPA violation to this case given that they agreed to settle similar charges with fines,” Martin said. “We believe that they are making this a criminal charge to pressure him because he has insisted on taking the case to trial.”
A message left with an attorney for Reed wasn’t immediately returned.
In 2022, the Department of Justice filed civil charges on behalf of the Federal Trade Commission against the men’s timeshare-exit business, alleging that they strong-armed mostly elderly customers into paying high prices for help getting out of timeshare contracts, which was often not provided.
Prosecutors say the men applied for $1.6 million in PPP loans for the timeshare business claiming they would use the money to keep their salespeople on the payroll. But the firm, Square One Group, paid most of its employees commissions based on their sales rather than salaries and continued to do so after being granted $1.2 million in government loans, according to court documents.
When Carroll instructed Square One’s chief financial officer to file the loan applications, he allegedly described the money as $1.6 million in free dollars,” prosecutors said.
Despite getting the money, Carroll and Reed are accused of cutting their staff’s health coverage after sales dipped sharply after the pandemic began.
Prosecutors allege that the men also lied in their application by naming Carroll’s wife as a principal of the company rather than Carroll himself because he had a prior felony conviction for a sexual assault that resulted in him being listed as a level three sex offender. People with felony records were ineligible to receive PPP loans. Carroll’s wife had no role in the company, prosecutors said.
Instead of using the PPP loans to help their employees, prosecutors say Carroll and Reed used the cash to launch the trucking business and acquire the fleet of 30 trucks.
This story originally appeared on Marketwatch
