NYC transit worker and court officer plead guilty to COVID loan fraud

June 13, 2023 Rob Abruzzese

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Photo: Yuki Iwamura/AP.

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Two New York civil servants pleaded guilty on Monday to committing wire fraud linked to the fraudulent receipt of approximately $770,000 from the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP).

The fraud was perpetrated during the height of the COVID-19 pandemic. The defendants, Arthur Cornwall, a signal maintainer at the New York City Transit Authority, and Sean Williams, a New York State Court Officer, could face up to 30 years in prison, along with restitution and a hefty fine.

“The abuse of disaster relief programs is a serious crime, and it is reprehensible that two civil servants would blatantly steal from these programs for small businesses and families struggling during the pandemic,” U.S. Attorney Breon Peace said. “The defendants are being held accountable. This case should serve as a reminder that while the worst days of the pandemic are in the past, law enforcement has a long memory for those who defrauded those relief programs.”

The court filings reveal that Cornwall and Williams applied for and received at least six PPP and EIDLP loans totaling around $770,000 between May and July 2020. The duo submitted falsified documents that overstated their businesses’ number of employees, revenue, payroll costs, and misrepresented the intended use of the loan proceeds.

Instead of using the funds for disaster relief as stipulated by the PPP and EIDLP under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the pair redirected the funds for personal use, discharging personal credit card debts and purchasing cryptocurrency.

The names of the fictitious corporate entities were – ACornwall Family Industries, Inc., NYC Corporation X, 4th Quarter Realty, Inc., and SL Steele, Inc., and they made fraudulent applications under these business names.

In their applications, they provided false information including fake identities, over- or under-reported the number of employees, misstated revenue and payroll costs, and misled authorities about the intended use of the loan proceeds. As a result, they received more than $770,000 in loans intended for struggling small businesses.

Once the funds were received, they used the money for personal expenses instead of business costs. Cornwall used more than $31,000 to pay off his personal credit card debts. Williams spent approximately $33,000 to purchase cryptocurrency.

They now face potential restitution of over $770,000, heavy fines, and long prison terms. The government also intends to seize any property obtained from the proceeds of the fraudulent scheme.

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