MEMPHIS, Tenn. — A Memphis man will spend the next five and a half years in federal prison in connection with his scheme to defraud the Paycheck Protection Program (PPP) of more than $700,000, a federal program intended to help small businesses survive the COVID-19 pandemic, according to the U.S. Department of Justice (DOJ).
According to court information, 44-year-old Herman Shaw submitted a false PPP loan application alongside an accomplice in the name of “Freight Masters, Inc.,” his small trucking business in Memphis, to a United States Small Business Administration (SBA) approved lender. The application contained numerous false statements, including false information about the number of people Freight Masters employed.
Shaw received $782,212 in loan proceeds to be used for approved business expenses, but he instead used the money to pay gambling debts and other personal expenses and to provide his accomplice with a $262,000 kickback, the DOJ said.
On August 2, 2024, Shaw pled guilty to one count of wire fraud.
United States District Court Judge Thomas L. Parker sentenced Shaw to 30 months in federal prison on November 6, 2024. He was also ordered to pay back the full $782,212 to the SBA.
“Individuals preying on the generosity provided by the Paycheck Protection Program stole money from U.S. taxpayers for personal gain without regard to the economic losses felt around the country," said acting U.S. Attorney Fondren. "This sentencing reflects the severity of thefts from COVID-19 relief programs."
