Date: Dec. 19, 2024 Contact: newsroom@ci.irs.gov Baltimore, MD — Today, Melvin Thompson Jr. of Chestertown, Maryland, pleaded guilty to one count of wire fraud and one count of filing a false tax return in connection with submitting fraudulent loan applications. Erek L. Barron, U.S. Attorney for the District of Maryland, announced the guilty plea with SAC Kareem A. Carter, Internal Revenue Service Criminal Investigation (IRS-CI), Washington, D.C. Field Office. Sentencing is scheduled for March 19, 2025, at 10 a.m. The Coronavirus Aid, Relief, and Economic Security (CARES) Act — a federal law enacted in March 2020 — provided emergency financial assistance to Americans suffering from the economic effects of the COVID-19 pandemic. The CARES Act gives financial assistance including forgivable loans to small businesses for job retention and other expenses. Established by the CARES Act, the Paycheck Protection Program (PPP) — administered through the Small Business Administration (SBA) — along with the Economic Injury Disaster Loan (EIDL), helped businesses meet their financial obligations. According to his plea agreement, beginning around March 2020, and continuing until approximately Feb. 22, 2021, Thompson knowingly executed a scheme to defraud the U.S. Small Business Administration by obtaining fraudulent EIDLs and loans under the PPP. In addition, as part of his scheme, Thompson filed false corporate tax returns, under penalties of perjury, with the IRS on behalf of four businesses seeking EIDL money. These businesses reported false or fictitious revenue and expense amounts. In support of these applications, Thompson submitted fraudulent, unfiled tax returns. Additionally, on a few occasions, Thompson filed fraudulent tax returns with the IRS in support of his CARES Act loan applications. Thompson primarily used the small business relief loan proceeds to engage in high frequency trading of options contracts and other securities, mainly at TD Ameritrade, where during 2020 alone he purchased and sold more than $12 million in securities. Through this high frequency trading, Mr. Thompson lost the $791,004 that he gained through this scheme, with the exception of money he spent to purchase a 2020 Lincoln Navigator. The District of Maryland Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the CARES Act. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds. U.S. Attorney Barron commended the IRS-CI for its work in the investigation. Mr. Barron also thanked Assistant U.S. Attorney Sean R. Delaney who is prosecuting the case. IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
