A Florida couple, previously based in Northwest Arkansas, has admitted guilt in a scheme to defraud pandemic relief loan programs. U.S. District Judge Timothy L. Brooks oversaw the plea hearing, where Fawaad Welch, 41, admitted to wire fraud, and Julia Youngblood, 41, acknowledged misprision of a felony.
The couple faced allegations of misrepresenting financial details from May 2020 to October 2021 in applications for pandemic relief loans, including the SBA 7(a), Economic Injury Disaster Loan, and Main Street Loan Programs through their company, Slipstream Creative, LLC. Welch was accused of providing false information about assets and liabilities, and Youngblood signed the fraudulent applications. After securing the funds, Welch allegedly diverted substantial loan amounts for personal use, including purchasing a home in Florida with $445,000 of the funds.
Court documents reveal the couple did not disclose essential information, such as tax liabilities and overlapping loans from other programs. Welch reportedly transferred $1.3 million out of the $1.5 million Economic Injury Disaster Loan funds to their personal account. Additionally, they are accused of misappropriating $950,000 in Main Street Loan Program funds.
The couple acknowledged responsibility for an intended loss between $3.5 million and $9 million. They await sentencing after a presentence report by the U.S. Probation Office. Welch could face up to 20 years in prison, while Youngblood could face up to three years. Both may also receive supervised release, monetary penalties, and be required to pay restitution. U.S. District Judge Timothy L. Brooks will determine their sentences.
U.S. Attorney David Clay Fowlkes announced the couple's change of plea. The case was investigated by the FBI, the Office of Inspector General for the Federal Reserve System, the Consumer Financial Protection Bureau, and the Special Inspector General for Pandemic Relief. Prosecution is being handled by U.S. Attorney David Clay Fowlkes and Assistant U.S. Attorney Ben Wulff.
This case is part of the broader effort by the Fraud Section to prosecute fraud related to the Paycheck Protection Program. Over 150 defendants have been charged, with more than $75 million seized in connection with these fraudulent activities.
Further information is available on the Justice Department's website.