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August 18, 2023

Kentucky Woman Indicted for Her Role in Obtaining Paycheck Protection Program Payments Utilizing Fraudulent Internal Revenue Service Documents

On July 11, 2023, in the Western District of Kentucky, Darlene McCoy was indicted on four counts of wire fraud, one count of bank fraud, and two counts of money laundering.  

According to the court documents, between June 2020 through September 2021, McCoy devised a scheme to defraud the Small Business Administration (SBA) Paycheck Protection Program (PPP). McCoy utilized Legal Zoom to form her business, named Letz Get It Crackin', which included obtaining an Employer Identification Number from the Internal Revenue Service (IRS).

In furtherance of the scheme, McCoy electronically filed an application for a PPP loan related to Letz Get It Crackin' by submitting an SBA form containing materially false and misleading statements to a financial institution.  McCoy included IRS Forms 941, Employer's Quarterly Federal Tax Return, for all four quarters of Tax Year (TY) 2019 that stated the entity had nine employees, paid a total of $546,000 in wages, and owed $277,264 in employment taxes. McCoy also included IRS Form 941 for the first quarter of TY 2020, which stated the entity had nine employees, paid $126,000 in wages, and owed $63,984.06 in employment taxes. Lastly, McCoy included a TY 2019 IRS Form 1120, U.S. Corporation Income Tax Return, which stated the entity had gross receipts of $927,153 and owed $37,435 in income taxes. 

In August 2020, the financial institution approved the loan application for $113,750 and distributed the funds into a Letz Get It Crackin' bank account. Almost immediately, McCoy began using the PPP funds for her own personal use, both directly out of the Letz Get It Crackin' bank account and through other accounts that she controlled to which she transferred the funds.  

If convicted, McCoy could receive a maximum term of 20 years’ imprisonment for the wire fraud counts, 30 years’ imprisonment for the bank fraud count, and 20 years’ imprisonment for the money laundering counts.

Source:  The facts in this case narrative come from the following publicly available document: W.D. Ky., Indict., filed July 11, 2023.