Boulder Man Sentenced to Prison for Covid Fraud

DENVER – The United States Attorney’s Office for the District of Colorado announces Russell Bryant Lester, age 41, of Boulder, was sentenced to 30 months in prison for taking money from pandemic relief funds by filing false applications. Lester was also ordered to pay restitution in the amount of $584,851.75.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided emergency assistance, administered by the United States Small Business Administration (SBA), to small business owners affected by the Coronavirus (COVID-19) pandemic. The two primary sources of funding for small businesses were the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program.

On November 15, 2020, Lester pleaded guilty to one count of wire fraud. According to the plea agreement, from March 2020, through August 2020, Lester made false statements to obtain EIDL and PPP loans. During the same period, Lester also made false statements to the Colorado Department of Labor and Employment about not being employed in any capacity in order to collect pandemic unemployment benefits from the state.  The SBA funded four EIDLs for a total of $217,400, awarded three grants through the EIDL program totaling $16,000, and funded two PPP applications in an amount totaling $317,975. A third PPP loan application—requesting a loan of $297,200—was not funded. In April 2020, Lester applied for pandemic unemployment benefits from the Colorado Department of Labor and Employment. In his application for unemployment benefits, he stated that he was not currently working or receiving pay as a result of the COVID-19 pandemic, and that he had not received pay since January 15, 2020. Subsequently, between April and October 2020, Lester completed weekly certifications wherein he falsely stated he did not work or receive any money or payments from an employer. As a result of these false certifications, he collected $17,578 in pandemic unemployment benefits from the state of Colorado. Lester knew these certifications to be false: in reality, he received $551,175 in COVID-relief funds in this period, some of which he used to pay himself. Lester spent portions of EIDL and PPP loan proceeds for non-eligible expenses, including paying old debts unrelated to the businesses receiving the loans and extending high-interest loans to other individuals.

Judge Daniel D. Domenico sentenced the defendant on February 7, 2023. He also ordered the defendant to serve a term of three years on supervised release.

“This defendant took funds intended as a lifeline for struggling businesses and used them for his personal piggy bank. In the process, he concocted a whole set of lies and brought others into his crime,” said United States Attorney Cole Finegan. “We thank our partners at the FBI and SBA for their continuing work to hold accountable criminals who try to cheat the system.”

“The amount of pandemic program fraud we have seen is staggering. This was intended to be a financial safety net to help struggling families, support small businesses and keep the economy afloat — not a way for criminals to fund their lifestyles, like this one who stole hundreds of thousands of dollars,” said FBI Denver Special Agent in Charge Mark Michalek. “FBI Denver will continue to rigorously investigate those who defraud the taxpayer-funded pandemic relief program.”

This case was investigated by the Federal Bureau of Investigations (FBI) Denver Division, with assistance from the Small Business Administration (SBA). The prosecution is being handled by Assistant United States Attorneys Craig Fansler, Sarah Weiss, and Rebecca Weber.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

CASE NUMBER: 21-cr-00230