TEXARKANA, Texas - A Maud, Texas, man accused of attempting to defraud the government of millions in funds meant to help small businesses survive the COVID-19 pandemic has been formally indicted for wire fraud in a Texarkana federal court.
Samuel Morgan Yates, 32, is accused of making two fraudulent applications for funds through the Paycheck Protection Program authorized by the federal Coronavirus Aid, Relief and Economic Security (CARES) Act enacted by Congress in late March 2020.
Yates allegedly claimed falsely that he needed the funds for his business, Lone Star Tuning.
"Lone Star Tuning was a sole proprietorship located in Maud, Texas. Defendant Samuel Morgan Yates was the 100% owner of Lone Star Tuning, and its business address was located at his residence. Lone Star Tuning had no operations prior to January 2020 and generated no revenue," the indictment states.
Yates allegedly applied for millions in funds from the PPP program and received more than $500,000 in an account he maintained at a credit union in Texarkana, according to records.
"In the application submitted to the first lender, Yates allegedly sought $5 million in PPP loan proceeds by fraudulently claiming to have 400 employees with an average monthly payroll of $2 million. In the second application, Yates claimed to employ over 100 individuals and was able to obtain a loan over $500,000," the press release states.
Yates is also accused of submitting forged tax documents with each application.
According to the indictment, the government is seeking Yates' forfeiture of more than $500,000.
Each of the two counts of wire fraud facing Yates is punishable by up to 20 years in federal prison and a fine up to $250,000, if convicted.
Yates is currently free on a $10,000 unsecured appearance bond set for him in May when the government first charged him in a criminal complaint. At that time, U.S. Magistrate Judge Caroline Craven appointed Texarkana lawyer Jeff Harrelson to defend Yates after the court determined Yates couldn't afford to hire his own counsel.
A date for Yates to appear in court for arraignment on the indictment has not been scheduled. The case is pending in the Texarkana Division of the Eastern District of Texas.