A Connecticut business owner has been sentenced in federal court for defrauding COVID-19 relief programs of more than $1.1 million.
Karen Gaston, 45, of East Granby, was sentenced by U.S. District Judge Sarah F. Russell in New Haven to three years of probation after pleading guilty to wire fraud and making illegal monetary transactions on June 12, according to the U.S. Attorney’s Office for the District of Connecticut.
Russell ordered Gaston Thursday to serve four weekends of incarceration, 10 months in home detention and 500 hours of community service during her probation, the U.S. Attorney’s Office said.
According to court records, in 2020, Gaston “controlled certain entities” including LNK, Elegant Clinical, Ruby Red LLC, and Diamond Shine LLC. Court records show that LNK and Diamond Shine LLC were operational but shared resources and employees, Ruby Red LLC had only one client and Gaston was its only employee and Elegant Clinical was not operational.
Beginning around April 2020, Gaston submitted loan applications to the Paycheck Protection Program and for Economic Injury Disaster Loans — both of which provided emergency funds under the Coronavirus Aid, Relief, and Economic Security Act. The applications Gaston filed “falsely represented the status of the operations, resources, and employees of these entities,” according to officials. She also reportedly filed loan applications at separate financial institutions “in order to disguise the true nature of her criminal activity,” officials said.
“Specifically, Gaston’s loan applications falsely represented that her businesses were all active and operating concerns; falsely represented the number of employees and the amount of wages purportedly paid by the businesses; included copies of fraudulent tax returns and tax related documents; and falsely represented that a family member, used as an applicant on an application, was a part owner of one of her entities,” according to court records.
Officials also alleged that at least one loan application was submitted after she was arrested on state charges in connection with an alleged Medicaid fraud scheme.
According to court records, Gaston reportedly received $1,163,910 through the scheme. “Instead of using the funds for payroll or other operating expenses, she spent the money on personal expenditures, including, cars, travel, food, luxury home goods, expensive jewelry, and paying off her home mortgage,” officials said.
Russell ordered Gaston to pay full restitution. Gaston also forfeited a ring she bought from jeweler Harry Winston in July 2020 for $39,521.63.
Information from Courant reporter Justin Muszynski was used in this report.
