A Scranton man pleaded guilty Thursday to acting as a “money mule” in a scheme that netted him and others more than $1.5 million meant for COVID-19 pandemic relief.
“I messed up,” said James G. Miller Jr., who lives in Scranton but also lived in Scott Twp. in Lackawanna County.
Miller, 53, quietly answered “yes,” “yes, sir” or “I understand” as Senior U.S. District Judge Robert D. Mariani read word for word the criminal information charging him with a single wire fraud felony count.
Mariani asked if Miller felt mentally competent to plead guilty, was satisfied with his lawyer, understood the case against him and many other questions.
Finally, Mariani reached the most important one.
“What is your plea to count one of the indictment as stated?” the judge asked.
“Guilty,” Miller said.
Assistant U.S. Attorney Sarah R. Lloyd referred to Miller as “a money mule” as she recapped the charges.
Felony wire fraud can mean up to 20 years in a federal prison, a fine of up to $250,000 and up to three years of probation after a convict is released.
As part of a plea agreement, Miller and prosecutors agreed to recommend an offense level that allows him to serve no more than 21 months in prison. The agreement says the actual loss was between $1.5 million and $3.5 million and requires Miller to pay back all the stolen money.
Mariani can reject the agreement and impose any sentence up to the maximum.
The judge set Oct. 17 as the deadline the federal probation office must turn over a pre-sentence report into Miller’s background. His criminal history will factor heavily into determining jail time.
The judge set Dec. 12 for sentencing.
In the criminal information, federal prosecutors say Miller and unnamed conspirators stole the federal money from programs meant to help people ineligible for standard unemployment or extended benefits; supplement eligible people’s unemployment benefits; and help businesses cover payroll and other day-to-day expenses.
It is unclear if prosecutors have charged anyone else in this case and how federal agents uncovered the scheme.
Assistant federal public defender Leo Latella told Mariani that Miller received a letter identifying him as a target of the investigation on April 13, 2023.
In court, Miller acknowledged targeting programs known as Pandemic Unemployment Assistance, Lost Wages Assistance and Paycheck Protection.
Between February 2020 and January 2022, Miller and the conspirators submitted more than 200 applications online for pandemic unemployment and lost wages assistance to about 17 state agencies that administer unemployment benefits, according to the information.
Miller’s wire fraud count involves a fraudulent July 7, 2020, unemployment benefits application to the Pennsylvania Department of Labor & Industry.
“The overwhelming majority of those applications were filed using stolen identities,” a criminal information filed against Miller says.
The applications lied about applicants’ demographic information and being available to work but unemployed.
In April 2021, Miller and the others submitted two phony paycheck protection applications to lenders approved by the Small Business Administration.
“The applications were filed using stolen identities and contained materially false representations, including fabricated business information, false financial information and forged federal tax documentation,” the information says.
The fraudsters funneled the money into bank accounts that Miller controlled and obtained “debit cards issued in the names of victims of identity theft.”
Besides the internet, they used the mail, wire transfers and Bitcoin transactions to illegally obtain the unemployment benefits.
They bought cryptocurrency, made cash withdrawals and paid “other personal expenses.”
In an April report, the U.S. Department of Justice’s COVID-19 Fraud Enforcement Task Force said federal agencies had charged more than 3,500 people with COVID-related fraud, negotiated more than 400 civil settlements and judgments and clawed back more than $1.4 billion in fraudulently obtained Coronavirus Aid, Relief and Economic Security Act money.
That’s only a fraction of the money stolen.
In a June 2023 report, the U.S. Small Business Administration Office of Inspector General estimated the agency disbursed more than $200 billion in potentially fraudulent loans and advanced money alone.
