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SACRAMENTO, Calif. (KTXL) — A Sacramento man pleaded guilty Monday to being involved in a fraud scheme totaling $1.2 million in COVID-19 relief funds, the office of U.S. Attorney Phillip A. Talbert announced. 

Prosecutors claim that Aaron Ashcraft, 42, obtained the money by defrauding the Paycheck Protection Program, which was guaranteed by the Small Business Administration (SBA). 

PPP loans are backed by the SBA under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act, created at the initial outbreak of the virus in the United States in March 2020, provided emergency relief for Americans who were struggling financially during the pandemic. 

In court documents, prosecutors said Ashcraft was involved in the fraud scheme between May 2020 and April 2021. During that time, Ashcraft also admitted to prosecutors that he defrauded the Maine Department of Labor. 

Prosecutors said Ashcraft admitted to embezzling about $780,000 from his former employer — a Sacramento street-sweeping company — from September 2017 through June 2020. 

During the scheme, prosecutors said Ashcraft submitted at least seven fraudulent PPP applications to SBA-approved lenders. Prosecutors said Ashcraft used fake business names in the applications. 

Ashcraft falsely said in the applications that each of the businesses had employees and monthly payroll expenses, according to prosecutors. Ashcraft submitted fabricated records to further support the PPP applications including Internal Revenue Service forms, checking account statements, and payroll summaries, prosecutors said. 

When submitting his applications, Ashcraft asked for over $1.2 million in PPP loans and obtained about $920,000, prosecutors said. 

As for the embezzlement of his former employer, prosecutors said Ashcraft held multiple positions at the company and was at one time the chief financial officer. That position allowed him to get access to the company’s business credit card accounts. 

While accessing those accounts, prosecutors said Ashcraft used those credit cards for personal expenses without authorization from the company. 

When Ashcraft admitted to defrauding the DOL in Maine, prosecutors said he applied for Pandemic Unemployment Assistance and claimed he lived in the state. 

According to a plea agreement in July 2020, Ashcraft also claimed that was he unable to work due to the pandemic, prosecutors said. 

Prosecutors said Ashcraft submitted falsified IRS forms to Maine’s DOL that stated he operated a business in the state and had an income of over $160,000 with a made a net profit of over $66,000 in 2019. He also fraudulently obtained unemployment compensation of over $58,000, prosecutors said. 

According to his plea agreement, prosecutors said Ashcraft agreed to pay the following restitution: 

  • $919,598 to three SBA-approved lenders
  • $45,979 to the SBA
  • $779,832 to his former employer
  • $58,050 to the Maine Department of Labor

Ashcraft is scheduled to be sentenced on Aug. 22 and faces prison time for one count each of wire and bank fraud. 

For wire fraud, Ashcraft faces up to 20 years in prison and a $250,000 fine. As for bank fraud, Ashcraft is facing 30 years in prison and a $1 million fine.