Criminal JusticeFederalIssuesDefendants Receive Years in Prison for Stealing Small Business Relief Funds During Pandemic

The two defendants used the proceeds from a fraudulent business to take a vacation and pay for other lavish personal expenses.
November 29, 2022
Two defendants from the Houston area received lengthy prison sentences after pleading guilty to wire fraud for stealing funds from one of the U.S. government’s programs to provide emergency financial aid to small businesses.

In a news release, the U.S. Department of Justice (DOJ) stated that federal Judge Robert Shroeder sentenced 47-year-old Clifton Pape to 121 months in prison and 59-year-old Sally Jung to 66 months. The former amounts to over 10 years and the latter equates to 5 years, 6 months behind bars. Pape and June pleaded guilty in May of this year.

Shroeder also assessed $3.7 million in other penalties and commanded them to forfeit $681,000 in illegal proceeds, per the DOJ.

The two residents of Cleveland submitted fraudulent applications to the Small Business Administration (SBA) and ultimately stole at least $1.3 million in grants, according to prosecutors.

Using a business called My Buddy Loans, they had promised clients they could receive agricultural grants. Instead, they used false information to apply for Economic Injury Disaster Payments from the SBA, which came with the possibility of $10,000 grants even if the loan applications were declined. Pape and Jung claimed that the businesses had at least 10 employees, the minimum number required to receive the funding.

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The DOJ also said they also collected at least $700,000 in “service fees” they charged via the fraudulent telemarketing business.

The pair used these funds for lavish personal expenses, including a vacation to a resort in San Antonio called La Cantera Resort and Spa. Pape even used a portion of the funds he stole to pay a speeding citation he was given when traveling through a town near Houston called Cut and Shoot.

William Mack, the resident special agent in charge at the Secret Service’s office in Tyler, commented on the sentencing.

“The Small Business Administration’s Economic Injury Disaster Loan program (EIDL) was designed to help businesses adversely affected by the pandemic,” Mack said.

“Clifton Pape and Sally Jung, however, viewed the government’s direct response to the unprecedented size and scope of pandemic relief fraud as an opportunity to illicitly line their own pockets. As this sentencing illustrates, the Secret Service, along with its law enforcement partners, is committed to holding these criminals accountable for their fraudulent activities.”


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Hayden Sparks

Hayden Sparks is a senior reporter for The Texan and a lifelong resident of the Lone Star State. He has coached competitive speech and debate and has been involved in politics since a young age. One of Hayden's favorite quotes is by Sam Houston: "Texas has yet to learn submission to any oppression, come from what source it may."