A Florida couple who previously lived in Northwest Arkansas have been sentenced to a combined total of more than nine years in federal prison for their involvement in a scheme to defraud pandemic relief loan programs. Julia Youngblood, 41, received a sentence of 15 months in prison followed by one year of supervised release and was ordered to pay $6,131,511.16 in restitution for misprision of a felony. Fawaad Welch, also 41, was sentenced to 97 months in prison with three years of supervised release and must pay the same amount in restitution for wire fraud.
The sentencing hearings were held before Judge Timothy L. Brooks at the United States District Court in Fayetteville.
Court records show that from May 2020 through October 2021, Welch and Youngblood applied for loans through various pandemic relief programs using their business Slipstream Creative, LLC, an advertising and marketing company based in Fayetteville. During this period, Welch provided false information about the company’s assets and liabilities as well as how they intended to use the funds from SBA7(a), Economic Injury Disaster Loan (EIDL), and Main Street Loan Programs. He arranged for Youngblood to sign these applications on behalf of the business.
Government filings indicate that after receiving the loan money, Welch diverted large portions for personal use. The couple did not disclose important details such as existing tax liabilities or that they were applying for multiple loans simultaneously. In one instance, after receiving $1.5 million in EIDL funds in October 2021 described as “working capital,” Welch transferred $1.3 million into their personal bank account and later used $445,000 from government loan funds to buy a home in Florida.
In April, both Welch and Youngblood waived indictment by a grand jury and pleaded guilty to criminal information.
According to court documents related to the plea agreement with Welch, when asked by Generations Bank officials about salary restrictions under the Main Street Loan Program—“the Fed restricts changes to your salaries with the [Main Street Loan Program] and doesn’t allow distributions”—Welch responded: “Yes sir we do at 10k a month, so all is good there. 5k a piece.” However, within one month of receiving $3 million from program funds, he transferred $950,000 out of the business accounts into personal accounts.
Prior to sentencing, authorities recovered over $1.2 million from the couple’s accounts through forfeiture actions.
U.S. Attorney David Clay Fowlkes of the Western District of Arkansas announced the sentences.
The case was investigated by several agencies including the Federal Bureau of Investigation; Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau; and Special Inspector General for Pandemic Relief.
Prosecution was handled by U.S. Attorney David Clay Fowlkes and Assistant U.S. Attorney Ben Wulff.
“The Fraud Section leads the Criminal Division’s prosecution of fraud schemes that exploit the Paycheck Protection Program (PPP). Since the inception of the CARES Act, the Fraud Section has prosecuted over 150 defendants in more than 95 criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds,” according to information provided by Justice.gov/OPA/pr/justice-department-takes-action-against-covid-19-fraud.
