Funds

3.5 years prison for Hilo man in COVID funds fraud

HONOLULU (KHON2) — Carey Mills aged 47 of Hilo, Hawai’i has been sentenced to 42 months in federal prison. The conviction covered wire fraud “in connection with a scheme to defraud the federal government of program funds intended for COVID-19-related relief”, according to the U.S. Department of Justice.

Mills pleaded guilty to charges related to a single count of wire fraud on May 17, 2022. In addition to his 42 month sentence, Mills will receive five years of supervised release. Mills also will be paying $937,575 in restitution to the Small Business Administration.

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“Carey Mills stole federal funds that provided a lifeline to our small businesses struggling as a result of the COVID-19 pandemic,” said U.S. Attorney Clare E. Connors.

According to court documents, Mills fraudulently submitted multiple applications for the Paycheck Protection Plan and Economic Injury Disaster Loan funds on behalf of three businesses under his control — Kanaka Maoli Hookupu Center, New Way Horizon Travel and Uilani Kawailehua Foundation. Each time, Mills utilized interstate wires for the transactions.

“The Treasury Inspector General for Tax Administration aggressively pursues those who attempt to abuse the Coronavirus Aid, Relief and Economic Security Act and its Paycheck Protection Program, which was created to assist legitimate business owners during the pandemic,” said J. Russell George, Treasury Inspector General for Tax Administration.

In his submissions from May to August of 2020, Mills fraudulently provided payroll documents and IRS forms that claimed employee compensation and payroll records, according to court records.

“While this is the first COVID-19 program fraud sentencing in the District of Hawai’i, the Department is committed to investigating and prosecuting those who, like Mills, harmed both small businesses in need of these PPP and EIDL funds as well as the taxpayers who supported these programs,” added Connors.

Mills received $937,575 in payments in the form of three forgivable PPP loans and one EIDL grant. He was entitled to neither of these, according to the prosecutors.

“We appreciate the efforts of our law enforcement partners and the United States Attorney’s Office to ensure individuals engaged in criminal activity are held to account,” added George.

Prosecuting attorney Connors pointed out during the trial that Mills used the funds for personal gain including purchases of eight vehicles and two residential properties.

The PPP and EIDL programs were set up to assist small businesses survive the COVID-19 lockdowns and quarantines. PPP funds provided small businesses access to funds that covered specific payroll costs that included benefits, interest on mortgages, rent and utilities.

Meanwhile, EIDL is a separate program that sought to provide low-interest loans and grants to small business that experience disruptions in their finances due to federally-declared disasters like the COVID-19 pandemic.

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Chief U.S. District Judge Derrick K. Watson presided over the case; and Assistant U.S. Attorneys Rebecca M. Perlmutter and Gregg Paris Yates represented the U.S. Treasury Inspector General for Tax Administration, the Federal Deposit Insurance Corporation Office of the Inspector General, the Small Business Administration Office of the Inspector General and Homeland Security Investigations as the prosecution team.

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