COVID-19News & Opinion

Ballantyne Business Owner Indicted for COVID-19 Fraud

Carolina Fish Market owner James Seidel is under indictment on 17 charges of fraud related to EIDL funds from the SBA

Outside view of the Carolina Fish Market in Ballantyne, owned by James Seidel - Charlotte
James Seidel owned Carolina Fish Market (previously called Carolina Meat & Fish Co.) in Ballantyne.
[UPDATE (7/28/23): James Seidel has pleaded guilty to making false statements to the US government, a felony. In an agreement with prosecutors, Seidel may be sentenced to probation and fines for the false statements. If, for some reason, he doesn’t comply with the terms of the agreement he faces a maximum sentence of 5 years in prison and up to a $250,000 fine, according to court docs.]

 

Local entrepreneur James Seidel has been indicted by a grand jury on 16 counts of wire fraud and one count of theft of government property for alleged misuse of COVID-19-related relief funds from the federal government, according to court documents.

The funds were taken out while Seidel was owner of Carolina Fish Market in Ballantyne (previously called Carolina Meat & Fish Co.). He claims to have sold the business since, though that hasn’t been confirmed.

He has also been the subject of allegations of sexually deviant behavior with underage employees at the market dating back to Mother’s Day 2020.

Filed in South Carolina US District Court in August 2022, the indictment claims that Seidel “engaged in a scheme to defraud the Small Business Administration … by utilizing the funds obtained from his SBA Economic Injury Disaster Loan (EIDL) for unauthorized purchases, including investments in cryptocurrency through multiple platforms … instead of legitimate business purposes during the COVID-19 pandemic.”

Seidel’s case differs from a large majority of COVID-19 relief fraud cases, in which defendants have pleaded guilty to obtaining the funds by fraudulent means either through misinformation in applications, or falsifying bank records to show a different business income, according to sources.

Queen City Nerve found no records of federal cases in which EIDL funds were obtained legitimately, but used for means other than business operations, as is alleged in this case.

The EIDL is a Small Business Administration (SBA) financial-relief loan designed as an economic recovery tool for businesses operating during a disaster. The program was expanded during the COVID-19 pandemic, during which there were additional EIDL grant opportunities for businesses in low-income areas that could show a 30% reduction in revenue over an eight-week period and had less than 300 employees.

The EIDL program included grants, known as EIDL Advances; and loans, which is what Seidel received. Unlike the grants, the loans had to be repaid and after funds were used exclusively to “make regular payments for operating expenses, including payroll, rent/mortgage, utilities, and other ordinary business expenses, and to pay business debt incurred at any time (past, present, or future),” according to the SBA website.

Alleged fraud by Carolina Fish Market owner

Seidel allegedly applied for $200,000 in relief from the SBA’s EIDL in October 2021, which was approved the same month. Records show $199,900 was deposited into his personal bank account in early November 2021, according to court documents. The difference includes a $100 processing fee for the transaction.

The indictment goes on to say that, though the funds were deposited into Seidel’s personal account, they were loaned to Grayson & Mae, LLC, the partnership that manages Carolina Fish Market. A small business account was then opened at the same bank the application was made, and the funds were transferred from the personal account to the small business account, according to the indictment.

In May 2021, the U.S. Attorney General established the COVID-19 Fraud Enforcement Task Force to assist the Department of Justice in investigating and combatting pandemic-related fraud.

Since the onset of the pandemic and the distribution of relief funds, the U.S. Government Accountability Office (GAO) has been tracking the government’s prosecution of hundreds of fraud and improper payment cases. As of February 2023, the GAO estimated that one program alone, Unemployment Insurance, made more than $60 billion in fraudulent payments, though a March 2022 congressional testimony by Department of Labor Inspector General Larry Turner estimated that amount to be nearly $163 billion.

The GAO stated that, through January 2023, more than 1,000 people have pleaded guilty to fraud related to one or more COVID-19 relief programs. The organization claimed the SBA Office of Inspector General had 536 investigations into COVID-19 relief fraud open as of January 2023.

How are sentences handed down in cases of COVID-19 relief fund fraud?

Locally, the father and son team behind La Shish Kabob, La Shish Kabob Catering, Green Apple Catering, and Aroma Packaging were convicted in federal court for money laundering and bank and wire fraud. Izzat Freitekh was sentenced to 48 months in prison on five charges, and Tarik Freitekh was sentenced to 147 months in prison on five charges related to fraudulent loan applications for $1.7 million worth of Paycheck Protection Program (PPP) funds.

A local fraud analyst was among a group of people that also pleaded guilty to fraud charges related to PPP funds in Charlotte in October 2022. Tamakia Harris, Shavondra White and Cedric Benton are all charged with wire fraud conspiracy and at least one is facing an additional 16 counts of wire fraud. Each defendant faces a maximum sentence of 20 years in prison if convicted for conspiracy, and a maximum of 20 years per count for the additional wire fraud.

Seidel’s case is only the third fraud case to involve a Charlotte-area business, though it’s being tried in South Carolina, where Seidel lives and does his banking. At least 20 cases have been or are being prosecuted in the Western District of NC, of which Charlotte is a part, according to a representative for US Attorney Dena King. King’s office is also actively pursuing multiple leads related to suspected wrongdoing in regard to COVID-19 relief funds, the rep said.

Of the cases in Charlotte’s district so far, six are related to the Payroll Protection Program, five are related to Unemployment Insurance, and 10 are related to EIDL funding.

A list of charges that are being brought against James Seidel, owner of Carolina Fish Market
Court documents show alleged cryptocurrency purchases made by James Seidel with SBA relief funds for Carolina Fish Market.

Documents in the latest case state that between Nov. 5-18, 2021, Seidel purchased approximately $113,109.63 in cryptocurrency through different crypto-trading platforms in amounts ranging from $10.05 to $20,000, which court documents allege were purchased with the money he received through EIDL.

Seidel’s alleged purchases came at a time when global cryptocurrency values were at their peak. According to a CoinMarketCap chart, the global cryptocurrency market was at an all-time high on November 10, 2021 and has since seen a major decline from nearly $3 trillion down to $1 trillion in overall value.

The document claims he made two transfers in January and February 2022 from his small business account to his personal account totaling $25,000 and $80,000, respectively before making two payments to a law firm that are cited as “home purchase” in the indictment.

Currently pending in the district court, proposed forfeitures of Seidel’s properties in this case include the sum of all money obtained plus interests and proceeds traceable to the initial $199,900 loan: more than $40,000 in USDC cryptocurrency, more than $6,000 in Solana Cryptocurrency, more than $2,000 in Bitcoin, more than $18,000 seized from his small business account, approximately $3,000 seized from his personal account, and a home he purchased on Campbell Lake Court in York County.

If Seidel is convicted, these properties will be forfeited to the government. A single count of wire fraud carries a maximum penalty of up to 20 years in federal prison for each count; however, under the Emergency Disaster Assistance Fraud Penalty Enhancement Act of 2007, when the fraud is connected to a presidentially declared disaster, the penalty increases to up to 30 years in federal prison.

In the world of white collar crime, Seidel’s charges are on the less serious end of the spectrum, as federal prosecutors often try cases involving millions of dollars or more. Therefore, a conviction in Seidel’s case likely won’t amount to a sentence anywhere near the maximum penalties, as was the case with the Freitekh family.

Seidel has entered a plea of not guilty and his case has been continued multiple times, with the court granting a continuance to the August 2023 term in order to allow Seidel to “participate in ongoing discussions regarding legal theories, possible defenses, potential resolutions and prepare for trial,” according to a continuance order filed on May 23.

Also in May, he announced the sale of his business on the market’s website stating, “Various news to report: The business has been sold. The new owners will be announced very soon. Jim has retired down[sic] from volleyball coaching. Jim is moving to Hampton, SC to retire to be near to his children.”

Counsel for Seidel has not responded to a request for comment as of the writing of this article.


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