WILMINGTON, N.C. – Loretta Clarice James, 49, has been sentenced to eight years in prison for her involvement in a multi-million-dollar COVID-19 fraud scheme, the U.S. Department of Justice (DOJ) announced Friday. James had previously pleaded guilty to conspiracy to commit wire fraud on May 29, 2024.
James and her co-conspirator, Lakesha Bowles, 43, were involved in defrauding several federal relief programs designed to support businesses during the economic turmoil caused by the COVID-19 pandemic. Bowles was sentenced on April 24 to 30 months in prison for her role in the scheme.
Both women have also been ordered to repay more than $1 million in restitution for their crimes, which impacted hundreds of victims across North Carolina.
Fraudulent Loan Applications and False Claims
The fraud scheme began when James and Bowles conspired to submit fraudulent loan applications to the Paycheck Protection Program (PPP). According to the DOJ, James inflated payroll numbers for nonexistent or dormant businesses and submitted loan applications both in her name and the names of others she recruited. Once loan money was received, James and Bowles took a cut.
James expanded her fraudulent activities by submitting false applications to the Economic Injury Disaster Loan (EIDL) Program and the Restaurant Revitalization Fund (RRF). She created fake businesses and inflated salaries for employees who did not exist, resulting in more than $500,000 in fraudulent EIDL disbursements.
In total, the women and their co-conspirators fraudulently obtained over $1.5 million in COVID-19 relief loans. Darnell William King, 41, of Clayton, North Carolina, was also involved and pleaded guilty to PPP fraud and identity theft charges on March 11.
Identity Theft Scheme and Loan Fraud
In addition to her involvement in the COVID-19 relief fraud, James participated in a separate identity theft scheme. The DOJ states that James and her associates used stolen Social Security numbers from individuals with good credit to fraudulently apply for loans or personal lines of credit from private lenders. They forged documents and emails to secure loans that ranged from $5,000 to $10,000. These loans were never repaid, and James recruited individuals, referred to as “mules,” to pick up the loan funds.
The scheme was conducted repeatedly, resulting in significant financial harm to both the victims whose identities were stolen and the financial institutions defrauded.
Law Enforcement Response
The investigation was triggered by complaints from Wake County residents reporting identity theft and fraud. A thorough investigation led by the Wake County Sheriff’s Office and supported by multiple agencies, including the NCDMV License and Theft, Clayton Police Department, U.S. Department of Homeland Security, and IRS Criminal Investigations, uncovered a vast network of fraud.
“We commend the investigators for their diligence in uncovering these crimes and bringing justice to the hundreds of victims involved,” said Wake County Sheriff Willie Rowe.
Commitment to Justice
Acting U.S. Attorney Daniel P. Bubar emphasized the importance of holding criminals accountable, stating, “This office is committed to holding accountable those who exploited a national crisis and the hardships of others for their personal gain and greed.”
Special Agent in Charge Donald “Trey” Eakins of the IRS Criminal Investigation unit also condemned the defendants’ actions, adding, “We will continue to work alongside our law enforcement partners to pursue individuals who try to exploit federal relief programs for their personal gain.”
With James now sentenced, authorities remain focused on investigating and preventing further fraud involving relief programs meant to assist businesses during times of crisis.
