News Summary
Michael James DeFrees, a 63-year-old from Vancouver, was sentenced to 21 months in federal prison for fraudulently acquiring over $2.5 million in COVID-19 relief funds. He falsely claimed eligibility while on probation for a felony conviction. Along with the sentence, DeFrees must forfeit $1.2 million and pay over $1.3 million in restitution to the SBA. Federal investigators actively recovered stolen funds, involving asset seizures including vehicles and boats, to satisfy obligations and maintain the integrity of assistance programs.
Vancouver, Washington – Major case of COVID-19 Relief Fraud Results in Sentencing
Michael James DeFrees, a 63-year-old real estate developer from Vancouver, has been sentenced to 21 months in federal prison for fraudulently obtaining more than $2.5 million in COVID-19 relief funds. The conviction is part of ongoing efforts to combat fraud related to the Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP), which were created to provide financial support to businesses affected by the COVID-19 pandemic.
Details of the Fraudulent Activities
Between 2020 and 2022, DeFrees submitted multiple loan applications, falsely claiming he had no criminal convictions or restrictions related to parole or probation. In reality, at the time of these applications, he was on probation for a 2017 felony conviction concerning the falsification of records during a bankruptcy proceeding. By misrepresenting his criminal status, DeFrees was able to improperly secure more than $2.5 million in federal relief funds through EIDL and PPP loan programs.
The investigation found that DeFrees used a portion of the illicitly obtained funds to finance personal expenses. Additionally, he engaged in money laundering activities by transferring some of the funds through an unlisted business entity to obscure their origin and destination. Authorities also uncovered that DeFrees transferred assets and money to third parties as part of his attempt to conceal the illegal gains.
Asset Recovery and Restitution
The U.S. Attorney’s Office’s Asset Recovery Unit (ARU) took steps to seize assets connected to DeFrees’s illicit activities. These assets included a 2016 Duckworth boat, a 2006 Ford F-350 pickup truck, a 2006 MTI racing boat, two Honda Yeti snow bikes, and a 2011 Land Rover. The units successfully recovered the full restitution sum of $1,346,481 and forfeited assets valued at over $1.2 million.
All proceeds from the sale of seized assets and one real property held by DeFrees will be directed back to the Small Business Administration (SBA). The forfeited funds are scheduled to be deposited into the Assets Forfeiture Fund, supporting future law enforcement efforts. The chief of the ARU emphasized the commitment of investigators to recover misappropriated taxpayer funds and bring justice to those who abuse federal relief programs.
Other Notable COVID-19 Relief Fraud Cases
In a related case, two brothers from Arizona, Eric and Anthony Karnezis, pleaded guilty to conspiracy to commit wire fraud, having defrauded the SBA of nearly $109 million in COVID-19 relief funds. Eric Karnezis submitted at least 350 fraudulent PPP applications, earning approximately $3 million. Meanwhile, Anthony made over 140 fraudulent applications, netting more than $957,000.
The Karnezis brothers face up to 20 years in prison, with sentencing scheduled for June 20, 2025. Both have agreed to pay restitution amounting to several million dollars as part of their plea agreements.
Additional Cases: Fraud and Financial Crimes
Another individual, Joel Matthew Caswell, aged 30, was recently arrested for multiple financial crimes, including fraud related to PPP and EIDL programs. Caswell applied for funds from 2018 to 2022, falsely citing employee numbers and business income to obtain more than $224,000. He faces charges including wire fraud and tax evasion, and conditions of his release involve restrictions on assets and passport surrender.
Caswell has a history of legal disputes, with lawsuits exceeding $630,000 for breach of contract and unpaid debts. His alleged activities further highlight ongoing efforts to identify and prosecute individuals abusing federal pandemic relief programs.
Conclusion
The cases exemplify concerted efforts by federal agencies to detect, seize, and prosecute COVID-19 relief fraud. Authorities stress that recovered funds aim to be returned to taxpayers and the SBA, reinforcing accountability and ensuring the integrity of future aid programs. The ongoing investigations and prosecutions serve as a warning to individuals attempting to exploit pandemic relief efforts for personal gain.
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HERE Resources
Additional Resources
- KPTV: $25M Recovered from Vancouver Real Estate Developer COVID-19 Loan Fraud
- Oregon Live: Man Pleads Guilty in Oregon to $60 Million COVID Relief Fraud
- KTVZ: Arizona Brothers Plead Guilty in Oregon to $109 Million COVID Relief Fraud
- Wikipedia: COVID-19 Relief Funding in the United States
- Boston 25 News: Maine Woman Fakes Beauty Salon for Pandemic Relief Funds
Author: STAFF HERE RALEIGH WRITER
RALEIGH STAFF WRITER The RALEIGH STAFF WRITER represents the experienced team at HERERaleigh.com, your go-to source for actionable local news and information in Raleigh, Wake County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the North Carolina State Fair, Raleigh Arts Festival, and the Hopscotch Music Festival. Our coverage extends to key organizations like the Greater Raleigh Chamber of Commerce and Visit Raleigh, plus leading businesses in technology and education that power the local economy such as Red Hat and NC State University. As part of the broader HERE network, including HEREAsheville.com, HERECharlotte.com, HEREGreensboro.com, and HEREOBX.com, we provide comprehensive, credible insights into North Carolina's dynamic landscape.
