Magee submitted falsified documents in loan applications that inflated revenue and claimed dozens of nonexistent employees on behalf of 17 businesses. The scam drained millions of dollars from the key coronavirus relief programs established by Congress during the height of the pandemic — nearly $6.8 million from the Paycheck Protection Program (PPP) and $854,000 from the Covid Economic Injury Disaster Loan Program (EIDL), according to a statement of facts filed in court Friday.
Magee “personally derived” about $5.3 million of the total haul, he admitted in the court filing. His attorney, Stuart A. Sears, did not respond to a request for comment. The businesses he used to claim relief funds included Infinity Solutions Group, a consultancy that claimed high-profile clients on its website, including Sprint and the IRS.
Other businesses Magee had registered and for which he sought covid relief funds are: the Minority Owned Business Coalition, United Basketball Association, Bull Run Capital Investments, Bounce Mania, Onyx Special Police and the Gifted Hands Moving Company.
Gilcher obtained $1.4 million from the scheme, but he wrote checks back to Magee’s company, Bull Run Capital, totaling approximately $620,000, prosecutors said.
The U.S. government has spent nearly $5 trillion on coronavirus relief programs, and PPP fraud has been rampant. The Magee case was investigated by a special task force set up to combat such fraud, according to the U.S. Attorney’s Office for the Eastern District of Virginia, which prosecuted Gilcher and Magee.
In 2022, prosecutors with the attorney’s office charged more than 50 people in 26 fraud schemes related to the coronavirus pandemic, involving attempts to siphon nearly $125 million from the U.S. government, according to statistics released by U.S. Attorney Jessica D. Aber last year.
Gilcher described Magee as an impresario with highflying credentials. According to Gilcher’s plea documents, Magee said he had a doctoral degree from Johns Hopkins University, “that he had played football at the University of Alabama under a legendary coach; that he had been an Army Ranger; and that he had served in the ‘Old Guard’ Army regiment at the Tomb of the Unknown Soldier.” The document did not say whether Gilcher had verified those claims.
But Gilcher said he called him “Doctor Magee,” and took direction from him on falsifying documents that were then sent to TD Bank and the Small Business Administration, which manages the EIDL program. Gilcher’s attorney, Christopher Leibig, declined to comment Friday.
Prosecutors said Magee spent his cut of the money on a mix of personal expenses, including renovations of his Manassas home and “substantial” mortgage payments on the property, which was in pre-foreclosure before the scheme, according to court records. He also invested in cryptocurrency and on the E-Trade platform, bought cars, made tuition payments for his children, and paid himself and family members money via a payroll software, Magee admitted.
Gilcher and Magee “lost substantial portions of the PPP proceeds in crypto currency ventures,” according to Gilcher’s plea documents.
A third man, identified in court documents as Magee’s brother-in-law, J.S., also took part in the scheme, taking directions from Magee on covid relief loans on behalf of four companies, according to Magee’s plea documents. J.S. was not publicly charged with wrongdoing as of Friday.
“Magee had access to the books and records of all the entities,” according to documents filed with Magee’s guilty plea. He inflated the number of employees each entity claimed, as well as quarterly and annual payroll figures and revenue totals, prosecutors said. He fabricated IRS business tax returns, then falsely claimed in loan applications that those returns had been filed with U.S. tax officials, Magee admitted.
In one instance, Magee listed on behalf of a company Gilcher ran “the actual names of 46 individuals he knew.” But none of them were on the payroll, Magee’s plea documents say. “Those names included Magee’s children, extended family members, and other people with whom Magee interacted or knew,” according to his statement of facts. “The spreadsheet listed false salaries, hours worked, gross pay, state and federal taxes, and social security and Medicare taxes supposedly withheld. It provided fictitious amounts of net pay for each listed individual, and grand totals for all categories.”
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