Former Hanford employee admits to COVID loan fraud for his solar-powered wheelchair business
A Tri-Cities man admitted to conspiring with two others who fraudulently obtained approximately $265,000 in federal COVID relief loans, including submitting false pay stubs and tax returns to the federal government.
David “Kurt” Schneider, 54, of Kennewick, and two co-defendants also requested additional payments or loans of approximately $563,600, but those requests were denied.
Schneider pleaded guilty Wednesday in Yakima federal court to conspiracy to commit wire fraud and bank fraud.
He initially obtained a low-interest loan of $1,000, claiming that his solar-powered wheelchair manufacturing company, Solar Mobility, had no employees and made no sales in 12 months preceding January 31, 2020.
A few months later, in July 2020, he applied for another loan, falsely claiming that during those 12 months, Solar Mobility had five employees and $45,000 in gross revenue.
He had partnered with Kelly Jo Driver of South Carolina, who created false payroll records for businesses and false Internal Revenue Service payroll tax forms to support fraudulent loan applications, according to a federal court document.
Schneider was denied the first loan he applied for using documents created by Driver, but with his help he obtained a $59,300 federal loan in August 2020 to use for payroll, according to court documents.
Records show he then sent her $5,000.
It was a COVID Paycheck Protection Program loan that could be forgiven if he spent at least 60% of it on payroll and 40% on other business expenses.
His request to have the loan forgiven was denied by Community First Bank, which had issued the federally guaranteed loan, and Schneider made no payments on it. The loss was transferred to the federal government.
No pay stub
In early 2021, Schneider applied to Community First Bank for another Paycheck Protection Program loan of $123,300.
When the bank asked to see bank statements showing salary payments, Schneider sent Solar Mobility statements from the company bank.
They showed that the only large deposit into the Solar Mobility account came from the prior Paycheck Protection Program loan in August 2020. Money in the account was spent on personal purchases and large cash withdrawals.
Court documents show Schneider withdrew about $30,700 and wrote a check to BMW Tri-Cities in Richland.
Schneider explained why there were no payroll expenses on the account in an email to Community First Bank. He falsely stated that “due to the uncertainty of the pandemic and banks being closed due to COVID exposure, my employees wanted to be paid in cash, so we paid in cash and still got paid filed Nos. (IRS) 941 accordingly.”
The Washington State Department of Revenue said Schneider reported no income in 2019 or 2020 and that his only salary in those two years came from a job at the Hanford nuclear site at the plant vitrification, according to the Washington State Department of Employment Security.
The loan was refused.
Schneider also applied for loans with Driver’s help for his company Tempest Tactical Solutions, which Schneider said had been in business since February 12, 2020, and had seven employees.
Both requests were refused because the company had only been established in September 2020.
Schneider had more success with a third business, RealNZ Water, a company that sells bottled water in New Zealand.
He received two loans in spring 2020 and defaulted on both in August 2022.
The WA Department of Revenue had no record of RealNZ Water’s existing or reported income and no wages were reported to the WA Department of Employment Security, a filing shows judicial.
Pasco arms dealer accused
The third man in the case, besides Schneider and Driver, is Leif Gerard Larsen, owner of Larsen Firearms in Pasco.
Schneider told Larsen he could obtain loans that could be forgiven using fake payroll records created by Driver, if he paid him 10 percent of the money received, according to a court document.
Larsen then got a Paycheck Protection Program loan of about $149,000.
He then told the FBI that Driver had created false documents for his application and had no employees, according to court documents.
Driver and Larsen have pleaded innocent in the case.
Assistant U.S. Attorneys Jeremy Kelley and Frieda Zimmerman plan to ask Judge Stanley Bastian that Schneider be sentenced to prison.
They and Schneider also agreed that he should pay restitution of at least $126,000, which includes the loans’ principal, accrued interest and lender fees.
Schneider is scheduled to be sentenced Aug. 13.
Attempts to defraud loan programs during the pandemic cost “critical funds that were intended to be used as a lifeline for struggling local small businesses during the COVID-19 pandemic,” said Vanessa Waldref, U.S. attorney in the Eastern Washington State.
The case was investigated by the Eastern District of Washington COVID-19 Fraud Strike Force, as well as the FBI and the U.S. Small Business Administration Office of Inspector General .
yahoo
