Springfield business owner charged with PPP fraud

SPRINGFIELD, Missouri (KY3) – The federal government is suing a business owner in southwest Missouri over the use of PPP funds amid the pandemic.

Federal authorities have accused John Michael Felts of using money to help businesses improve individual homes during the pandemic. Felts is a well-known business owner familiar with restaurants like Hot Cluckers, Taco Habitat, Bourbon & Beale, and more.

Federal investigators said Felts used false identities to apply for at least a dozen payment protection payment loans, using hundreds of thousands of dollars in properties instead of those businesses. Investigators said he participated in “a scheme to complete false and fraudulent applications for the Paycheck Protection Program.”

A spokesman for the U.S. Attorney for the Western District of Missouri said no criminal charges have been filed against Felts. However, the federal government is seeking to seize various properties in the Jones Spring subdivision east of Springfield. They said Felts used hundreds of thousands of federal funds to improve homes.

David Mitchell, a professor of economics at Missouri State University, said the PPP loans were made with good intentions.

“They should be used for your normal business expenses, paying staff, utilities, maybe you continue to pay rent for the building,” Mitchell said.

Mitchell said he believed many of the programs we are seeing now will happen because the government wants to help businesses quickly.

“The government is trying to get the money out as quickly as possible, and when that happens, of course, it leads to fraud,” Mitchell said.

Investigators said the Small Business Administration and other financial institutions indicated that Fields applied for the loans through different companies he controlled.

The documents state that “most of these companies had no employees and were not operating at the time,” although Felts said they were.

Mitchell said there was no swift government action. Many businesses can fail.

“During this time, it can take two, three, four or even six months to get the money out. Of course, these businesses go out of business,” Mitchell said.

As customers, we all pay for it, Mitchell explained.

“Fraud is a problem for everyone, and it’s the price we all pay in the end,” Mitchell said. “As taxpayers, we’re basically paying it. These are our taxes, which essentially go to other people.”

Felts’ attorney issued the statement.

“On September 13, 2022, members of the IRS executed a search warrant for information and items related to Michael Felts’ business dealings with individuals outside of San Antonio, Texas. Mr. Felts Hired Legal counsel has been appointed to handle the matter and cannot comment further on this investigation.”

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