FAYETTEVILLE – A Florida couple, formerly of Northwest Arkansas, pleaded guilty Monday to defrauding Pandemic Relief Loan Programs. U.S. District Judge Timothy L. Brooks presided over the plea hearing, in which Fawaad Welch, age 41, and Julia Youngblood, age 41, both waived indictment and pleaded guilty to a criminal information. Welch pled to wire fraud and Youngblood pled to misprision of a felony related to the scheme.
According to court documents and statements made in court, between May of 2020 through October of 2021, Welch and Youngblood applied for Pandemic Relief Loan Programs through their Arkansas business, Slipstream Creative, LLC, which was a Northwest Arkansas advertising and marketing company located in Fayetteville, Arkansas.
Throughout the applications, Welch provided the lenders with false statements regarding their assets and liabilities and the intended use of funds received through the SBA7(a), Economic Injury Disaster Loan and Main Street Loan Programs. Youngblood them signed those application on behalf of the business. According to the information filed by the Government, after receiving the loan funds, Welch then diverted large parts of the loan proceeds for the personal benefit of the couple. For example, in the applications submitted for these loans, the couple failed to disclose material information such as tax liabilities and the fact that they were receiving loans from the other loan programs. Also, within months of receiving $1.5 million in “working capital” Economic Injury Disaster Loan funds in October 2021, Welch transferred $1.3 million of that loan to the couples personal bank account. The couple then purchased a home in Florida using $445,000 of those Government program loan funds.
and doesnt allow distributions, Welch replied, “Yes sir we do at 10k a month so all is good there. 5k a piece.” After receiving the $3 million in program funds, within a month Welch had transferred $950,000 in Main Street Loan Program funds out of the business and to himself.
In the plea agreements with the Government, the couple agrees that pursuant to this scheme, they should be held accountable for more than $3.5 million but less than $9.0 million in intended loss.
Following the preparation of a presentence investigation report by the U.S. Probation Office, Welch and Youngblood will be scheduled to be sentenced at a later date. Welch faces a maximum penalty of twenty (20) years in prison, and Youngblood faces a maximum penalty of three (3) years in prison. Both individuals will also be assessed a period of supervised release, monetary penalties, and restitution. U.S. District Judge Timothy L. Brooks will determine the couples sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney David Clay Fowlkes announced the change of plea hearings.
The Federal Bureau of Investigation, Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau, and the Special Inspector General for Pandemic Relief investigated the case.
U. S. Attorney David Clay Fowlkes and Assistant U.S. Attorney Ben Wulff are prosecuting the case for the United States.
The Fraud Section leads the Criminal Division’s prosecution of fraud schemes that exploit the Paycheck Protection Program (PPP). Since the inception of the CARES Act, the Fraud Section has prosecuted over 150 defendants in more than 95 criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.
More information can be found at Justice.gov/OPA/pr/justice-department-takes-action-against-covid-19-fraud.
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