Officer used $1.2 million in COVID loans for personal expenses in Arizona, feds say

A Phoenix police officer resigned after she was accused of fraudulently obtaining over $1 million from the federal government in COVID-19 relief loans, local outlets reported.

According to court records, Toni Richardson and Willie Mitchell falsely applied for loans from the Paycheck Protection Program, a loan program established by the federal government during the COVID-19 pandemic.

Attorneys representing Richardson did not immediately respond to McClatchy News’ request for comment..

Richardson, a Phoenix police officer, and Mitchell applied for the loans on behalf of a business they incorporated called The Lotto Club, which at various times purported itself to be a social club or a charity for veterans, according to court records. Their loan application included false information, including fake employment data and fictitious payroll, the federal indictment said.

Richardson was listed as the director, CEO and president of The Lotto Club, and as having 100% ownership of the business. The loan application claimed that the business had 85 employees and an average monthly payroll of $510,635, but the business actually had no employees or payroll expenses, according to court records.

PPP loans were intended to provide emergency financial aid to businesses during the pandemic to help cover expenses like payroll, rent, utilities and other costs. The loans were potentially forgivable as long as employee retention criteria were met and the funds were only used for eligible expenses.

The two ultimately obtained $1,276,500 in loans through the program and are accused of using the money to pay for personal expenses. They transferred the funds to personal bank accounts and “disguised business expenses to enrich themselves and confederates,” the indictment said.

The Phoenix Police Department began the process to terminate Richardson’s employment after finding out about her arrest. However, Richardson resigned before she could be terminated, the Phoenix Police Department said in a statement. The grand jury indicted her and Mitchell on charges of conspiracy, bank fraud, and transactional money laundering, according to court records.

Richardson is scheduled to appear in court on Feb. 1, 2022, court documents said.

This story was originally published December 9, 2021 at 12:22 PM with the headline "Officer used $1.2 million in COVID loans for personal expenses in Arizona, feds say."