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 roles in a scheme to defraud pandemic relief loan programs. Julia Youngblood, 41, received a sentence of 15 months in federal prison, followed by one year of supervised release. She was also ordered to pay $6,131,511.16 in restitution after pleading guilty to misprision of a felony related to the scheme. Fawaad Welch, also 41, was sentenced to 97 months in federal prison and three years of supervised release and must pay the same amount in restitution for wire fraud.
The sentencing hearings were overseen by Judge Timothy L. Brooks at the United States District Court in Fayetteville.
Court documents show that between May 2020 and October 2021, Welch and Youngblood applied for pandemic relief loans through their business Slipstream Creative, LLC, an advertising and marketing company based in Fayetteville. During this period, Welch provided lenders with false information about the company’s assets and liabilities as well as how they intended to use funds from various programs including 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.
According to government filings, after receiving the loan funds, Welch diverted significant amounts for personal use. The couple did not disclose important information such as existing tax liabilities or that they were applying for multiple loans from different programs at once. After receiving $1.5 million in EIDL funds in October 2021 labeled as “working capital,” Welch transferred $1.3 million into their personal bank account and used $445,000 of those funds to purchase a home in Florida.
In April, both Welch and Youngblood waived indictment by a grand jury and pleaded guilty.
As part of his plea agreement, Welch acknowledged telling Generations Bank officials that he and Youngblood each took salaries of $5,000 per month when asked about restrictions on salary changes under the Main Street Loan Program: “Yes sir we do at 10k a month, so all is good there. 5k a piece.” Within one month of receiving $3 million from program funds, he had transferred $950,000 out of the business accounts into personal accounts.
Before sentencing was announced, authorities forfeited over $1.2 million recovered from the couple’s accounts.
U.S. Attorney David Clay Fowlkes for the Western District of Arkansas announced the sentences.
The investigation involved several agencies: 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 along with Assistant U.S. Attorney Ben Wulff.
The Justice Department’s Fraud Section leads efforts against schemes exploiting COVID-19 relief programs like PPP loans. Since passage of the CARES Act it has prosecuted over 150 defendants across more than 95 criminal cases involving fraudulent PPP claims—seizing over $75 million plus real estate properties and luxury items purchased with illicit proceeds.
More details are available at https://www.justice.gov/opa/pr/justice-department-takes-action-against-covid-19-fraud
