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 – Fraud and Money Laundering Leading to Sentences for COVID Relief Scheme and Other Financial Crimes

In Vancouver, Washington, authorities have announced the sentencing of Michael James DeFrees, a 63-year-old real estate developer, who received a sentence of 21 months in federal prison for executing a large-scale fraud involving COVID-19 relief funds and money laundering activities. The case highlights the ongoing efforts by federal agencies to combat pandemic-related financial crimes and recover stolen taxpayer dollars.

DeFrees’ COVID Relief Fraud

DeFrees fraudulently obtained more than $2.5 million through two federal relief programs—the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP)—between 2020 and 2022. His scheme involved submitting false applications claiming he had no disqualifying criminal convictions or active probation status, which was not accurate.

At the time of application, DeFrees was on probation following a 2017 felony conviction related to falsifying records during a bankruptcy proceeding. Despite this, he falsely certified his eligibility, enabling him to secure the loans intended to aid small businesses during the COVID-19 pandemic.

Prosecutors report that DeFrees used a portion of the illicit funds for personal expenses, and engaged in money laundering activities by transferring funds through an unlisted business entity. This effort was part of an attempt to conceal the source and ownership of the stolen money.

Asset Recovery and Restitution

The U.S. Attorney’s Office Asset Recovery Unit took charge of pursuing assets linked to DeFrees, filing liens against properties, and seizing various assets, including:

• A 2016 Duckworth boat
• A 2006 Ford F-350
• A 2006 MTI racing boat
• Two Honda Yeti snow bikes
• A 2011 Land Rover

Full restitution and forfeiture amounts have been recovered through the sale of the seized assets and one real property owned by DeFrees. These funds are designated for return to the SBA (Small Business Administration), with forfeiture proceeds directed to the Assets Forfeiture Fund. Katie de Villiers, Chief of the Asset Recovery Unit, emphasized the commitment of investigators to recovering stolen money for taxpayers and affected victims.

Other Major Cases Related to COVID Relief Fraud

Arizona Brothers Conspiring to Defraud the SBA

Two brothers from Arizona, Eric and Anthony Karnezis, pleaded guilty to conspiring to commit wire fraud by submitting approximately 490 fraudulent loan applications to the SBA, resulting in nearly $109 million in incorrectly funded COVID relief loans. The applications falsely claimed employment numbers and business revenues, enabling the brothers to collect more than $105 million.

Eric Karnezis earned around $3 million from submitting fraudulent applications, whilst Anthony received over $957,000. Both are facing a maximum 20-year prison sentence, along with fines. They are scheduled for sentencing on June 20, 2025, and have agreed to pay restitution of several million dollars.

Additional Cases of Financial Fraud

Joel Matthew Caswell, age 30, was recently arrested for committing multiple financial crimes, including misrepresentation in applications for PPP and EIDL loans between 2018 and 2022. Caswell falsified details regarding employee counts and revenue, receiving over $224,000 under false pretenses.

He faces various charges, such as wire fraud and tax evasion, and is subject to conditions including asset restrictions and surrendering his passport during his pre-trial release. Caswell’s financial history includes lawsuits totaling over $630,000 related to unpaid debts and breach of contract, indicating a history of financial disputes and alleged fraud in his community.

Summary of Enforcement and Impact

The recent enforcement actions demonstrate continued federal efforts to identify, prosecute, and recover funds lost to COVID-19 relief fraud and related financial crimes. The cases underscore vulnerabilities in relief programs and the importance of safeguards to prevent misuse. Efforts also focus on returning stolen funds to the government and taxpayers, with asset forfeiture serving as a key tool in these recoveries.

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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 MILWAUKEE WRITER

MILWAUKEE STAFF WRITER The MILWAUKEE STAFF WRITER represents the experienced team at HEREMilwaukee.com, your go-to source for actionable local news and information in Milwaukee, Milwaukee 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 Summerfest, Milwaukee Film Festival, and the Milwaukee Boat Show. Our coverage extends to key organizations like the Metropolitan Milwaukee Association of Commerce and Visit Milwaukee, plus leading businesses in manufacturing and brewing that power the local economy such as Harley-Davidson and MillerCoors. As part of the broader HERE network, we provide comprehensive, credible insights into Wisconsin's dynamic landscape.