PORTLAND, Ore.—On March 30, 2022, a Portland man was sentenced to federal prison for perpetrating a scheme to steal funds intended to help small businesses during the COVID-19 pandemic.
Eric Wade Lysne, 35, was sentenced to 30 months in prison and three years’ supervised release.
According to court documents, in April 2020, Lysne devised and perpetrated a scheme to defraud the Small Business Administration (SBA) and various financial institutions by fraudulently applying for and obtaining Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans using false borrower information. Lysne created fictitious entities, including Paradigm Consulting Groups (Paradigm), on whose behalf he applied for and received the loans.
In May 2020, Lysne applied for an EIDL, falsely claiming Paradigm employed 10 individuals in the agriculture sector and grossed nearly $1 million for the twelve-month period ending in January 2020. Lysne also falsely claimed that he, as the applicant, had not been convicted of any felonies in the last five years when, in fact, he had been in prison for nearly a year following a May 2019 felony conviction in Washington County, Oregon, and was then on post-prison supervision.
In early June 2020, SBA disbursed a $147,400 EIDL to Paradigm through Lysne’s personal bank account. The deposit was followed by an additional $10,000 advance paid several weeks later. After receiving the funds, Lysne spent them on various personal expenses, including travel bookings and numerous cash withdrawals.
In April 2021, Lysne applied for an increase in his EIDL balance, seeking to borrow an additional $302,600. The application was pending when Lysne was indicted in May 2021. Around the same time, Lysne also applied for a $50,000 PPP loan on Paradigm’s behalf from a bank in Logan, Utah. In the application, Lysne again falsely claimed he had not been convicted of any recent felonies. He further falsely represented that Paradigm employed two individuals and had an average monthly payroll of $20,000. Based on Lysne’s fraudulent misrepresentations, the bank approved the loan application in part and disbursed a $27,700 loan to Lysne.
Lysne made similar misrepresentations in five other successful PPP loan applications to various lenders. All told, Lysne fraudulently procured $360,467 in COVID-relief loans. He was ordered to pay that amount in restitution to the SBA and victim PPP lenders, and the court also ordered Lysne to forfeit an additional $185,100 to the United States Treasury.
U.S. Attorney Scott Erik Asphaug of the District of Oregon made the announcement.
This case was investigated by the U.S. Treasury Inspector General for Tax Administration (TIGTA), the SBA Office of Inspector General, and the FBI. Assistant U.S. Attorney Ryan W. Bounds prosecuted the case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.