Grand jury indicts pair in $11 million-dollar pandemic relief fraud scheme

DALLAS - United States Attorney for the Northern District of Texas, Ryan Raybould, announced that on Aug. 19, a federal grand jury indicted two individuals for allegedly orchestrating a multiyear scheme to defraud the Paycheck Protection Program of more than $11 million.

Katrina Dorsey, 50, from Chicago, Illinois, and Dushawn Nelson, 50, a resident of Dallas and Irving, Texas, were each charged with one count of conspiracy to commit wire fraud and four counts of wire fraud.

"The alleged conduct in this case represents a brazen theft of taxpayer-funded relief at a moment when Americans needed it most," said U.S. Attorney Raybould. "While small businesses were fighting for survival, these defendants treated a national emergency as an opportunity for profit. Vice President Vance and General Blanche have empowered us to relentlessly pursue anyone who steals from the American taxpayer."

According to the indictment, Dorsey and Nelson submitted or facilitated the submission of hundreds of fraudulent PPP loan applications beginning in June 2020 and continuing through September 2022. The PPP, administered by the Small Business Administration, was created to provide forgivable loans to small businesses struggling during the COVID 19 pandemic.

The indictment alleges that Dorsey prepared false loan applications using fabricated financial information and fictitious IRS Schedule C forms. Many forms claimed applicants earned $100,000 in gross income in 2019, regardless of actual earnings. Nelson allegedly referred individuals to Dorsey for a kickback and later began submitting loan applications himself.

Loan processors including Blueacorn, Womply, Bluevine, and Kabbage routed the falsified applications to SBA-approved lenders such as Celtic Bank and Cross River Bank, which funded loans of approximately $20,832 each. Lenders ultimately funded about 561 loans totaling approximately $11,049,548, depositing proceeds directly into accounts controlled by applicants. Applicants then allegedly paid Dorsey, Nelson, or other co-conspirators kickbacks ranging from $2,000 to $5,000, often via cash or electronic payments. In some instances, Dorsey allegedly forwarded portions of loan proceeds to Nelson or others.

If convicted, each defendant faces a statutory maximum penalty of 20 years in prison, a fine up to $250,000 and up to 3 years of supervised release.

The U.S. Railroad Retirement Board - Office of Inspector General and the FBI Chicago Field Office conducted the investigation. Assistant U.S. Attorney Chad E. Meacham from the Fraud Section is prosecuting the case.

An indictment is merely an allegation of criminal conduct, not evidence. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

###