Washington, D.C. man charged in $2.1 million scheme to fraudulently obtain pandemic relief loans

A Washington, D.C. man is facing charges alleging that he fraudulently applied for and obtained $2.1 million in coronavirus relief funds issued through the Small Business Administration, which he used to purchase a row house, a sports car, and a yacht.

Kenneth Gaughan, 41, was charged by the U.S. Attorney's Office with forging paperwork and bank records on behalf of falsified companies in order to receive federal loans from the Paycheck Protection Program and through the government's Economic Injury Disaster Loans program.

"We will not tolerate exploitation of this national emergency for personal gain," said Acting U.S. Attorney Michael Sherwin. "This Office will not allow fraudsters to steal taxpayer money intended to help small businesses that are currently struggling as a result of the COVID-19 pandemic."

Prosecutors say Gaughan's recently purchased boat and car have been seized, as well as several bank accounts, and a civil forfeiture action against the row house has been filed.

In a separate 12-count indictment, unsealed on Tuesday, Gaughan is charged with organizing an embezzlement scheme aimed at the Catholic Archdiocese of Washington, where he formerly served as the assistant superintendent. 

Prosecutors say that from 2010 to 2018, Gaughan orchestrated a payment system through the archdiocese, wherein the church would pay companies owned by Gaughan for services that were not provided. That scheme amounted to more than $427,000 stolen from the Catholic Church, authorities say. Gaughan pleaded not guilty on Tuesday. 

"Mr. Gaughan was so emboldened by deceiving a church for eight years he then, allegedly, turned his deception to the government," said Baltimore FBI Special Agent in Charge Jennifer Boone.