Developer Sentenced for COVID-19 Relief Fraud and Money Laundering

News Summary

Michael James DeFrees, a 63-year-old from Vancouver, was sentenced to 21 months in federal prison for fraudulently acquiring over $2.5 million in COVID-19 relief funds. He falsely claimed eligibility while on probation for a felony conviction. Along with the sentence, DeFrees must forfeit $1.2 million and pay over $1.3 million in restitution to the SBA. Federal investigators actively recovered stolen funds, involving asset seizures including vehicles and boats, to satisfy obligations and maintain the integrity of assistance programs.

Vancouver, WA — Developer Sentenced for COVID-19 Relief Fraud and Money Laundering

Michael James DeFrees, a 63-year-old real estate developer from Vancouver, Washington, has been sentenced to 21 months in federal prison for orchestrating a scheme to fraudulently obtain over $2.5 million in COVID-19 relief funds. The case highlights ongoing efforts by federal authorities to combat pandemic-related financial crimes.

Details of the Fraud and Court Findings

Between 2020 and 2022, DeFrees applied for and received multiple Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans under false pretenses. These programs were established by the federal government to support small businesses during the COVID-19 pandemic, providing vital financial aid to those impacted by economic hardships.

DeFrees falsely claimed in his loan applications that he had no disqualifying criminal convictions and was neither on parole nor probation. However, at the time of application, he was on probation for a 2017 felony conviction related to falsifying records during a bankruptcy proceeding. His misrepresentations enabled him to secure more than $2.5 million in relief funds.

Use and Laundering of Funds

Part of the obtained funds was laundered through an unlisted business entity, and a significant portion was used for personal expenses. Investigators uncovered that DeFrees used the money to finance personal purchases, highlighting a misuse of emergency relief resources intended for small business support during the pandemic.

Asset Recovery and Restitution

The U.S. Attorney’s Office’s Asset Recovery Unit filed liens against DeFrees’s properties and confiscated various assets, including a 2016 Duckworth boat, a 2006 Ford F-350 truck, a 2006 MTI racing boat, two Honda Yeti snow bikes, and a 2011 Land Rover. These assets were subsequently sold, with the proceeds covering the full restitution of $1,346,481 and forfeiture of $1.2 million.

The recovered funds will be returned to the Small Business Administration (SBA), which disbursed the original relief loans. The remaining forfeited assets will go to the Assets Forfeiture Fund. Officials emphasized that these recovery efforts aim to compensate taxpayers and uphold accountability for pandemic relief funds.

Additional Cases of COVID-19 Relief Fraud

Alongside DeFrees’s case, authorities announced the guilty pleas of two Arizona brothers, Eric and Anthony Karnezis, who conspired to defraud the SBA of nearly $109 million through fraudulent loan applications. Eric submitted at least 350 fake PPP applications, earning about $3 million in the process, while Anthony processed over 140 applications, receiving more than $957,000.

The brothers face charges of wire fraud and conspiracy, with potential penalties up to 20 years in prison. They are scheduled for sentencing on June 20, 2025, and have agreed to pay restitution in the millions.

Recent Arrests for Fraudulent Activities

Further, Joel Matthew Caswell, aged 30, has been arrested for multiple financial crimes, including applying for PPP and EIDL funds fraudulently. Caswell submitted false documents claiming higher employee counts and revenues from 2018 to 2022, receiving over $224,000 in funds through misrepresentation.

He faces charges of wire fraud, tax evasion, and document falsification. Conditions of his release include limits on assets and surrendering his passport. Court records also indicate that Caswell has a history of legal disputes, including lawsuits totaling over $630,000 related to unpaid debts and breaches of contract, alongside ongoing allegations of financial misconduct.

Summary and Ongoing Efforts

These cases underscore the ongoing pursuit by federal authorities to address abuses of pandemic relief programs. Officials remain committed to uncovering fraudulent schemes and recovering misappropriated funds to ensure these resources serve their intended purpose and the broader public interest.

Deeper Dive: News & Info About This Topic

HERE Resources

Realtor Pleads Guilty to Multi-Million Dollar Wire Fraud Scheme

Additional Resources

• KPTV: $25M Recovered from Vancouver Real Estate Developer COVID-19 Loan Fraud
• Oregon Live: Man Pleads Guilty in Oregon to $60 Million COVID Relief Fraud
• KTVZ: Arizona Brothers Plead Guilty in Oregon to $109 Million COVID Relief Fraud
• Wikipedia: COVID-19 Relief Funding in the United States
• Boston 25 News: Maine Woman Fakes Beauty Salon for Pandemic Relief Funds