A man who, according to prosecutors, masterminded a $115 million N-95 mask Ponzi scheme will spend the next 244 months in a federal prison.
“The schemes for which this defendant was sentenced, including the purported sale of non-existent medical supplies during the pandemic, were outrageous,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department of Justice will continue to work closely with its law enforcement partners to prosecute those responsible for these types of fraud.”
“Today’s sentencing should give clear warning that the U.S. Postal Inspection Service will aggressively investigate and seek prosecution of individuals like Christopher Parris, who swindled investors out of their retirement savings and created financial devastation for so many victims,” said Inspector in Charge Ketty Larco-Ward of the U.S. Postal Inspection Service. “We will continue to support and collaborate with our federal law enforcement partners to stop those who are engaged in these types of schemes.”
Coronavirus Frauds and Pretrial Matters
Many COVID-19-related fraud cases are just now making their way through the criminal justice system in Cobb County. Most federal and state financial fraud prosecutions involve lengthy investigations and time-consuming grand jury indictments. The same process applies to many other federal and state criminal cases.
The burden of proof is very high in criminal cases. Therefore, law enforcement officers usually need a long time to gather the necessary evidence. Frequently, investigators get impatient and file grand jury cases when they have enough evidence to obtain indictments, but not when they have enough evidence to obtain convictions.
Such investigations often involve communication problems and differing political agendas. A Marietta criminal defense attorney uses these weaknesses to successfully resolve these cases.
On popular cops-and-robbers TV shows, investigators from multiple agencies work closely together, like athletes on the same team. But in reality, different agencies are more like different teams in the same conference. All teams want the conference to be strong, but each team wants to win the championship.
Furthermore, like different teams in the same conference, different investigating agencies do not always communicate with each other. Search warrants are a good example. Officer Jones gets a warrant and sends SWAT team leader Smith on a raid. That warrant may not be valid.
Once the matter gets to a grand jury, the indictment rate is very high. One New York judge famously remarked that a prosecutor could convince grand jurors to indict a ham sandwich. Grand jurors only hear one side of the story. A Marietta criminal defense lawyers cannot make legal arguments, challenge evidence, or even be in the same room. When prosecutors ask questions, defendants may request breaks to confer with counsel. If they do so, they might as well hang “Indict Me” signs around their necks.
When some people face indictment, especially for financial crimes, they often think if they “explained things” to the grand jury, they would escape indictment. That strategy never works.
PPP and EIDL Fraud
Paycheck Protection Program loans are the most common kind of coronavirus fraud cases. These short-term loans were available to businesses with fewer than 500 employees. If the borrower repaid the loan, the money came with no strings attached. The Small Business Administration forgave PPP loans if the borrower spent the money exclusively on:
- Rent,
- Payroll for workers earning less than $100,000 a year,
- Utility payments, and
- Mortgage interest payments.
Additionally, most borrowers could not lay off workers, or lower their wages, for eight weeks after they receive loan proceeds.
Borrowers have up to thirty years to repay long-term Economic Injury Disaster Loans. Generally, forgiveness was unavailable, although more favorable repayment terms, like a lower interest rate, were available in some situations.
Most PPP/EIDL loan fraud matters involve false statements to private Small Business Association lenders or false statements to the government, in an attempt to obtain forgiveness or more favorable repayment terms.
Loan fraud is a very serious offense. Any false statement affecting a material matter means up to five years in prison and a $250,000 fine. Many prosecutors are very eager to “make an example” of fraudsters in these cases.525
On a related note, consumer scams were prevalent during the height of the coronavirus crisis. Once again, many of these investigations are just now reaching the grand jury phase.
When disaster strikes, most people want to “do something” about it. Coronavirus consumer scammers take advantage of this generous impulse. Some common schemes include:
- Vaccine scams that induce people to provide bank account and other financial information,
- Coronavirus cure scams,
- Robocalls,
- False contact tracing scams, and
- Fraudulent P2P (peer-to-peer) mobile payment scams.
Scammers face significant state and federal penalties.
State and Federal Court
We mentioned one of the biggest differences between state and federal crimes above. The U.S. Constitution requires grand jury indictments in all felony cases. However, this provision only applies to federal criminal court matters. In state court, prosecutors have the power to unilaterally indict defendants. A grand jury indictment is basically a unilateral indictment as well. But grand jurors have the impression of independence.
Initial jail release is almost impossible to obtain in federal criminal cases. Instead, a Marietta criminal defense lawyer must schedule a bond hearing. At this hearing, which usually happens during the arraignment, the judge considers multiple factors when setting bail, including:
- Defendant’s criminal record,
- Severity of the offense,
- Defendant’s ability to pay,
- Amount of evidence against the defendant,
- Any threat to witnesses or the public, and
- Defendant’s ability, and willingness, to flee the jurisdiction.
These hearings are also available in state court matters. However, they’re usually bond reduction hearings.
Procedurally, most of the same rules apply to federal and state cases. That includes the burden of proof, which is probably the most important rule of all.
The resolution process is different in federal court. Congress approved the Sentencing Reform Act in 1984. This Act created the United States Sentencing Commission, which released mandatory sentencing guidelines. Advocates hoped these guidelines would eliminate wide sentencing discrepancies. However, the guidelines threw the baby out with the bathwater. Judges and prosecutors had no discretion in this area.
Subsequent reforms made the guidelines discretionary instead of mandatory. Nevertheless, Marietta criminal defense lawyers still have limited negotiating leverage in federal court. The sentence is almost always a straight prison time sentence.
In contrast, judges and prosecutors decide almost everything in state court plea bargain negotiations. Additionally, probation and parole are usually options in state court.
Financial fraud is a serious matter in federal and state court. For a free consultation with an experienced Marietta criminal defense attorney, contact The Phillips Law Firm, LLC. Our main office is conveniently located near downtown Marietta,
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