Fraud Friday – Fraudster’s Family Members Pay $300,000 Under the False Claims Act

September 15, 2023

Delaney Sexton
Contributing Editor

Fraud Friday – Fraudster’s Family Members Pay $300,000 Under the False Claims Act

“Debra Hackstadt showered ill-gotten pandemic relief funds upon her family members. These settlements prove that her crimes did not pay, and that we will use every tool at our disposal to follow the money and recover ill-gotten gains. In addition to criminal prosecutions, we can file False Claims Act lawsuits – with the potential for treble damages – and asset forfeiture actions. When appropriate, we can also seek recovery from people who financially benefitted from fraud even if they did not commit fraud themselves,” says U.S. Attorney Carla Freedman.

A year ago, Debra Hackstadt was sentenced to 16 months in prison for fraudulently obtaining 32 PPP and EIDL loans. Now, her family members are agreeing to pay the government $305,000 in civil settlements for COVID loans they were not eligible for.

Debra’s daughter, Danielle Hackstadt, will be paying double ($114,816) what she received in fraudulent COVID loans as a result of the False Claims Act. Her mother assisted her with getting a $42,500 EIDL and a $14,908 PPP loan. The EIDL application listed her as the sole proprietor of a health services company with a gross revenue of $85,000 while her PPP application stated she was the sole proprietor of a “cleaning company” with gross receipts of $82,547.

Danielle admitted that she was actually an employee of an insurance company and was not a sole proprietor of any company. She also confessed that she knew her mother was applying for loans using her name. The loan proceeds Danielle received were used for her personal benefit.

Danielle was not Debra’s only child who would be paying a settlement. Her son and daughter-in-law, Gerald and Traci Hackstadt, agreed to pay $190,000 to satisfy the claim. They have already made the $190,000 payment.

The U.S. Attorney’s Office shared that in a separate matter, they filed a lawsuit seeking the forfeiture of a lakefront residence and property. They alleged that a portion of the property was purchased with fraudulent pandemic relief funds that Debra acquired and transferred to family members.

“Debra Hackstadt deliberately took money from programs designed to help American businesses struggling financially during the pandemic and instead used it to line the pockets of her own family members. These settlements should prove the FBI is committed to working closely with our federal, state, and local partners to protect federally funded relief programs. Together, we will work diligently to ensure fraudulently obtained funds are tracked down and returned so they can be put to use to assist the millions of honest Americans who need them most,” says FBI Acting Special Agent in Charge Alfred Watson.

U.S. Attorney’s Office