Oregon Court Convicts Arizona Man for Stealing $60 Million in COVID Relief Funds to Buy Properties Across Three States

The U.S. District Court in Portland heard yesterday how Eric Karnezis (43) of Sedona, Arizona, defrauded the U.S. Small Business Administration of $60 million that had been allocated to assist small businesses to survive during the COVID pandemic.

Karnezis confessed to working with others to submit no fewer than 350 fraudulent applications to secure Paycheck Protection Program loans. He achieved this by submitting false tax documents and payroll information between January 2021 and March 2022.

He Spent the Money to Buy Properties in Three States

Court records show that the money was used to buy properties in California, Michigan, and Nevada.

Investigators found that Karnezis and his alleged accomplices submitted fraudulent loan applications for Blueacorn, an Arizona-based lender, to Capital Plus Financial.

According to a plea agreement, applications included false information about the businesses, the number of employees, their gross income, and payroll. Karnezis also submitted false loan applications for himself, obtaining more than $500,000 in loans, according to his plea agreement.

Restitution of Between $25 Million and $65 Million Must be Paid

Assistant U.S. Attorney, Meredith Bateman, told the court that Capital Plus Financial funded at least $60 million in loans. She said Karnezis must pay the government restitution of between $25 million and $65 million, in terms of the plea agreement. Karnezis has also agreed to forfeit at least six parcels of land.

The Karnezis case was prosecuted in Oregon because the bulk of the loan applications submitted online were received by the federal small business agency’s computer servers in Oregon.

Karnezis is in custody and will be sentenced before U.S. District Judge Karin J. Immergut on 20 June.

The co-founders of Blueacorn were indicted in federal court in Texas last year. According to a congressional report, they were accused of submitting false and fraudulent loan applications on behalf of their businesses and themselves and were accused of netting more than $300 million since the start of the business in April 2020, according to a congressional report.