Fraud Friday – Business Owner Will Lose 6 Cars, a Yacht, & More After Pleading Guilty to $14 Million Fraud
August 25, 2023
Delaney Sexton
Contributing Editor
Fraud Friday – Business Owner Will Lose 6 Cars, a Yacht, & More After Pleading Guilty to $14 Million Fraud
A Missouri business owner, John Michael Felts, decided to plead guilty to a $14 million loan fraud conspiracy after trying to obtain commercial loans, PPP loans, and EIDLs with false information. Instead of using proceeds to support his businesses, the money was used to purchase vehicles, a yacht, jewelry, rare sports cards, and construction related to personal residences.
As the owner of several restaurants, and later the creator of several fake businesses, he and another individual applied for loans and grants while making material misrepresentations and submitting fake and forged documents. Along with taking advantage of the EIDL program, he applied for 12 PPP loans for multiple companies under his ownership and control. Most businesses were not operating and did not have employees.
He and his co-conspirator also created fake businesses under fake identities they formed to apply for more loans. They applied for an additional 13 PPP loans with the synthesized or fabricated identities and companies.
The U.S. Attorney’s Office gave two specific examples of Michael Felts’ fraud:
Diagnostic Equipment, Inc.
Felts and his co-conspirator set up this business in January 2020 with the intention of representing it as a legitimate business. Later, they applied for a PPP loan and an EIDL using a fake identity, false tax statements, and false payroll summaries. Once they received more than $1 million in loan proceeds, it was used to pay off a personal real estate loan, a loan for a 2018 Cadillac CT6, a loan for a 2018 Jeep Wrangler, and to make a down payment for the purchase of personal real estate. Felts also applied for a second round of PPP loans, receiving an additional $1 million. This was used to pay for a corporate suite sponsorship with the Kansas City Chiefs ($150,000), a loan on a 2021 Galeon 470SKY Yacht ($213,000), $30,000 for the construction of a personal residence, and over $12,000 in sports memorabilia.
Taco Habitat
In another example, Felts and the other individual submitted a PPP application for Taco Habitat using false and fraudulent information. After receiving $310,000, Felts used more than $58,000 to purchase a 2020 Jeep Wrangler and more than $125,000 for the purchase of real estate.
As part of the plea deal, he will have to pay restitution in excess of $9.9 million and a money judgment of no less than $7 million. Additionally, he cannot oppose the government’s forfeiture of personal property and real estate related to two civil forfeiture complaints that were filed.