16 October 2023- Jeffrey Bearden, age 47, of Hagerstown, Maryland, pleaded guilty today to making a false statement on a loan application relating to the submission of fraudulent CARES Act loan applications. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a federal law enacted in March 2020 to provide emergency financial assistance to Americans suffering from the economic effects caused by the COVID-19 pandemic.
The guilty plea was announced by Erek L. Barron, United States Attorney for the District of Maryland; Special Agent in Charge James C. Harris of Homeland Security Investigations (“HSI”) Baltimore; and Special Agent in Charge Amaleka McCall-Brathwaite of the Small Business Administration Office of Inspector (“SBA OIG”), Eastern Region.
Financial assistance offered through the CARES Act included forgivable loans to small businesses for job retention and certain other expenses, through the Paycheck Protection Program, (“PPP”) administered through the Small Business Administration, through participating financial institutions.
According to his plea agreement, Bearden was the Chief Executive Officer of B&D Consulting Inc., a corporation that provided information technology services, including cybersecurity services. As detailed in the plea agreement, on May 1, 2020, Bearden submitted an application for a $734,609 PPP loan for B&D Consulting. As part of the application, Bearden certified that the loan application and supporting documents for his company, B&D Consulting, were accurate and correct. The $734,609 PPP loan was intended to be used primarily for employee salaries, but at the time of the application, the company had no employees, nor reported paying any earnings and wages for any employee to the Maryland Department of Labor and Licensing (DLLR) in 2020.
According to court documents, on May 18, 2020, the loan was approved and $734,609 was deposited into B&D’s bank account. That same day, the $734.609 was transferred to a different B&D bank account and a total of approximately $69,848.06 was subsequently transferred to Bearden and three other individuals. The next month, $600,000 was transferred to Bearden’s brokerage account and was used to purchase stocks in a variety of publicly traded companies, including one that produced a vaccine for COVID-19. The purchase of stocks is not an approved use of PPP loan funds by the Small Business Administration.
In February 2021, Bearden applied for a second PPP loan in a similar amount, attaching a fraudulent bank statement for B&D Consulting for the month of March 2020 showing the company was paying salaries to at least 19 individuals and that there had been $335,000 in total deposits and $332,017.10 in total withdrawals from the account. In fact, no deposits or withdraws had been made from that account in March 2020 and the account was overdrawn by more than $275. A loan for $734,609 was initially approved but later cancelled after the discovery of the fraudulent March 2020 bank statement and no funds were disbursed.
Bearden faces a maximum sentence of 30 years in federal prison. As part of his guilty plea, Bearden will also be required to pay a money judgment of $734,609 and to forfeit $16,562.15 seized from an investment account during the investigation. U.S. District Judge George L. Russell, III has scheduled sentencing for January 22, 2024, at 11:00 a.m.