Federal jury convicts former BSO deputy in COVID aid fraud case

A  federal jury has convicted a former Broward Sheriff’s Office employee of wire fraud, the first to be found guilty at trial after 17 agency employees were accused last fall of defrauding a U.S. Government program designed to help small businesses during the COVID-19 pandemic.

The U.S. Attorney’s Office in Miami announced the conviction on Wednesday.

Stephanie Diane Smith, 53, of Sunrise, was found guilty of two counts of wire fraud after a six-day trial in Fort Lauderdale. Prosecutors said Smith received two loans via the Small Business Administration’s Payroll Protection Program as a sole proprietor of two businesses called Children 1st Basketball Training and Agape Smith Vending in 2021, according to a news release.

The government said Smith used “materially false information about each business’s total amount of gross income for the year 2019, including a falsified IRS tax form submitted with each application.”

At the time, Smith was employed as a deputy in the BSO’s Department of Law Enforcement.

“Smith also sought and received forgiveness of both fraudulently obtained PPP loans, which totaled over $31,000 in principal and interest,” the government statement said.

Sentencing is scheduled for May 29 before U.S. District Judge James I. Cohn. Smith faces up to 20 years in prison for each of her convictions for wire fraud. But the sentence likely will be less under U.S. sentencing guidelines “and other statutory factors,” the statement said.

October roundup

A dozen of the 17 accused have pleaded guilty since October thus far. The defendants were ordered to rebate the money they received back to the government while receiving probation of between a year to five years.

Smith was among the agency employees arrested and suspended in a roundup on Oct. 11 after an investigation that started in 2021, according to Sheriff Gregory Tony and U.S. Attorney Markenzy Lapointe.

Collectively, the group collected $495,171 in loan money they were not qualified to receive.

Tony said at the time that the probe morphed from an internal investigation of one employee to an assessment of 5,500 people employed by the agency. The probe ended up concluding that 100 deputies and corrections officers had applied for SBA-backed business loans. Of that number, charges were brought against the group of 17 after a referral to federal authorities.

The FBI, Office of Inspector General for the Board of Governors of the Federal Reserve System, and the Consumer Financial Protection Bureau played roles in the investigation, the government said in its Wednesday statement..

In 2021, Attorney General Merrick Garland selected the Southern District of Florida’s U.S. Attorney’s Office to head one of three national COVID-19 strike force teams to investigate PPP fraud and alleged abuses of another emergency program designed to help small business owners under distress.