MORGANTOWN, September 18 — Two Morgantown business owners have been sentenced or entered guilty pleas in federal court for defrauding pandemic-era relief programs, part of a nationwide enforcement sweep totaling over $245 million in intended losses, the U.S. Attorney’s Office for the Northern District of West Virginia announced Wednesday. The cases are part of “Operation No Doze,” a summer fraud takedown coordinated by the Department of Justice, the Small Business Administration and the SBA Office of Inspector General across 40 federal districts.
The two-month federal surge produced enforcement actions against more than 160 criminal defendants nationwide.
Baldwin Sentenced in PPP Fraud
James Baldwin II, 46, owner of Morgantown business Select Decks, was sentenced to 30 days in federal prison and ordered to pay $1,007,223 in restitution. According to federal prosecutors, Baldwin applied for and received $738,230 in Paycheck Protection Program loans from multiple banks by falsifying loan documents for Select Decks and three other businesses that were not in operation before the pandemic. He then obtained full loan forgiveness from the SBA.
Investigators also determined that beginning in 2016, Baldwin withheld $258,993 in employment taxes from his employees’ paychecks, issuing W-2s reflecting the deductions, but failed to file required tax forms or remit any of the withheld money to the IRS.
Ly Pleads Guilty
In a separate federal case, Kurt Ly, 69, owner and operator of Vin Phat, Inc. in Morgantown, pleaded guilty to a scheme to defraud pandemic relief programs. Prosecutors stated that Ly obtained PPP loans, spent the funds on impermissible expenses, and falsely certified to the SBA that the funds were used properly to obtain loan forgiveness. Additionally, Ly secured a $146,600 Economic Injury Disaster Loan in August 2020 meant solely for business working capital.
Instead, investigators found Ly used the money for personal expenses, including a $15,000 car payment, personal bank account transfers and cryptocurrency investments. “These defendants deliberately stole from programs funded by American taxpayers and intended to support legitimate small businesses,” said United States Attorney Matthew Harvey.
“Our office will aggressively pursue those who misuse federal funds and will hold accountable anyone who attempts to defraud the United States.”
Program Background
The PPP was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in March 2020, to provide forgivable loans to small businesses affected by the COVID-19 pandemic. The EIDL program, administered by the SBA, provides low-interest loans to businesses recovering from declared disasters. What this signals is a continued federal focus on pandemic-era fraud enforcement, with the Northern District of West Virginia now contributing two cases to a national tally that spans 40 districts.
The broader stakes for the SBA and the Justice Department lie in whether the summer surge produces sustained prosecutions beyond the initial enforcement actions. Watch for additional sentencings and plea agreements as Operation No Doze cases move through the courts.
