The world of COVID-19 relief funds has recently been entangled in an unexpected web of illegal cannabis operations. In a surprising turn of events, an employee working for the prestigious National Aeronautics and Space Administration (NASA) found themselves at the center of a scandal involving the misuse of small business COVID relief to fuel an unlawful cannabis venture.
COVID Relief Funds and the Illicit Mingvape Sandglas Gravity Bong Operation
The employee at the NASA-Jet Propulsion Laboratory (JPL) allegedly used the relief funds to finance the operation. This revelation adds another layer of complexity to the case, raising questions about the misuse of government funds and the connection between the employee's actions and the unlawful cannabis operation. The Justice Department's announcement on July 24 highlighted the seriousness of the matter, signaling potential legal consequences for the employee involved in this illicit scheme.
Guilty Plea for Misappropriating COVID Relief Funds
"Armen Hovanesian, 32, of Glendale, a cost-control and budget-planning resource analyst for the JPL, a federally funded research and development center operated by the California Institute of Technology for NASA, agreed to plead guilty to a single-count information charging him with wire fraud," the Justice department wrote. "The information and a plea agreement were filed Thursday in United States District Court. Hovanesian is expected to make his initial court appearance on August 11."
Details of the Fraudulent Scheme
Per the plea agreement, between June 2020 and October 2020, Hovanesian applied for three loans, using the names of business entities under his control to the Economic Injury Disaster Loan Program (EIDL), a program administered by the Small Business Administration (SBA) that provided low-interest financing to small businesses, renters, and homeowners, in this case, for businesses impacted by the COVID-19 pandemic. "Hovanesian admitted to making false and fraudulent statements in the loan applications concerning the gross revenues each of the businesses had generated in the preceding year as well as false and fraudulent statements concerning his intended use of loan proceeds."
Consequences and Maximum Sentence
The Justice Department says Hovanesian fraudulently used the SBA to transfer via interstate wire EIDL proceeds amounting to $151,900. After Hovanesian pleads guilty, he will face a statutory maximum sentence of 20 years in federal prison.
Prevalence of COVID Relief Program Abuse
Abusing COVID-19 relief funding is commonplace. To combat this, the United States Attorney General established the COVID-19 Fraud Enforcement Task Force in May 2021, and hundreds of alleged criminals have been charged as part of the task force's work. COVID relief programs, including SBA funding and the Paycheck Protection Program, or PPP, were commonly abused. COVID relief loan schemes dominated the years following the pandemic.
Luxury Purchases with Misused Relief Funds
NBC News reported how COVID relief funds were abused to buy Lamborghinis, Ferraris, Teslas, and Bentleys. Justice Department Inspector General Michael Horowitz, who oversees COVID relief spending, told NBC anchor Lester Holt that COVID relief programs were structured in ways that made them especially easy to take advantage of. Businesspeople were caught buying expensive sports cars and other luxuries using the money.
Lack of Checks in Relief Program Administration
Mr Horowitz, the chair of the Pandemic Response Accountability Committee, announced the statements:
"The Small Business Administration, in sending that money out, basically said to people, ‘Apply and sign and tell us that you’re entitled to the money’"
"And, of course, for fraudsters, that’s an invitation. … What didn’t happen was even minimal checks to ensure the money was getting to the right people at the right time."
Unprecedented Scale of Fraud in COVID Relief Programs
"Nothing like this has ever happened before," said Matthew Schneider, a former U.S. attorney. "It is the biggest fraud in a generation."
