Evergreen Reporter

Lydia Spencer, 33, of South Charleston, was sentenced today to four months in prison, followed by three years of supervised release, and ordered to pay $36,814.13 in restitution for conspiracy to commit bank fraud. Spencer admitted to participating in a scheme to defraud the Paycheck Protection Program (PPP) of $31,250 in COVID-19 relief loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

According to court documents and statements made in court, Spencer was the sole proprietor of Les Prints, a custom clothing business based in Charleston. She conspired with at least three other individuals in April 2021 to obtain fraudulent PPP loans for her business. The PPP offered forgivable loans to small businesses for job retention and certain other expenses as part of the emergency financial assistance provided by the CARES Act during the COVID-19 pandemic.

One co-conspirator recruited Spencer that spring. She provided her personal and bank account information to this individual. On April 8, 2021, another co-conspirator used Spencer’s information to submit fraudulent PPP loan applications on behalf of Les Prints to two different lenders. Each lender approved a PPP loan for Les Prints. Spencer received a $15,625 transfer from one lender on April 30, 2021, and another $15,625 transfer from the second lender on June 17, 2021. Both transfers were deposited into Spencer’s personal bank account with an Oklahoma-based bank.

Spencer admitted that the PPP loan applications contained materially false information. Businesses applying for PPP loans were required to provide documentation showing their prior gross income from either 2019 or 2020. The loan applications falsely stated that Les Prints had received $75,000 in gross income in 2020 and included a fraudulent Internal Revenue Service (IRS) Form 1040 Schedule C reporting that false gross income. This false information qualified Les Prints for a loan amount it otherwise would not have been eligible to receive.

Between May 3 and June 21, 2021, Spencer used a mobile payment service app to transfer a total of $4,000 from the fraudulent loan proceeds to one co-conspirator. She attempted to obscure these transfers by labeling them as marketing expenses for her business and spent the remainder of the fraudulent loan proceeds on personal expenses. Spencer also admitted awareness that her co-conspirators had obtained additional fraudulent PPP loans in others' names.

United States Attorney Will Thompson commended the investigative work of the Federal Bureau of Investigation (FBI). United States District Judge Irene C. Berger imposed the sentence. Assistant United States Attorneys Holly Wilson and Gabriel Price prosecuted the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal resources across government agencies to combat pandemic-related fraud more effectively.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via their web complaint form.

Related court documents can be found on PACER by searching Case No. 2:24-cr-53.

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