Risk Assessment Algorithms | Maryland | Covid-19 Fraud

High-frequency trading remains a controversial activity for many reasons, one of them being the risk reward is exceptionally high. Sure, some traders could make up to 20%, but due to the inherent risks involved with high-frequency trading, which include rapid market fluctuations, algorithmic errors, technical glitches, and the potential for large losses during market events, many lose everything in a blink of an eye. But the risk might seem less for a fraudster when using the U.S. taxpayer’s money. Risk assessment algorithms for fraudsters are usually skewed to begin with.

Beginning in March 2020, Melvin Thompson executed a scheme to defraud the U.S. Small Business Administration by obtaining fraudulent Economic Injury Disaster and Paycheck Protection Program loans. As part of his scheme, Thompson filed false corporate tax returns with the Internal Revenue Service on behalf of four businesses he was using in filing for COVID-19 pandemic relief loans. These businesses reported false or fictitious revenue and expense amounts. As a result, Thompson fraudulently received $791,004 in proceeds.

After purchasing a brand new 2020 Lincoln Navigator, Thompson used the fraudulently gained small business relief loan proceeds to engage in high frequency trading of options contracts and other securities. Pandemic emergency relief aid used in the thrill of high-risk investment? Sounds more like compulsive trading. Even though Thompson purchased and sold more than $12 million in securities during the 2020 year, he lost the money he gained through this scheme.

On December 20, 2024, Thompson pled guilty to wire fraud and filing false tax returns related to COVID-19 relief fraud.

Excellent job by the District of Maryland Strike Force in this case.  

Today’s Fraud of The Day is based on article “Maryland Man Pleads Guilty to Wire Fraud and Filing False Tax Return in $791K COVID-19 Relief Scam” published by Hoodline Baltimore on December 20, 2024

A Maryland man has admitted to engaging in a scheme to defraud the government by filing phony COVID-19 relief loan applications and falsifying tax records, according to an announcement from U.S. Attorney Erek L. Barron for the District of Maryland in partnership with Special Agent in Charge Kareem A. Carter from the IRS-CI Washington D.C. Field Office.

Melvin Thompson Jr., 34, from Chestertown, pleaded guilty to one count of wire fraud and filed a false tax return following fraudulent loan applications submitted under the coronavirus relief package known as the CARES Act.