Inmate gets another 33 months for swindling Virginia out of $233K in COVID funds

A state jail inmate was sentenced in Richmond on Wednesday to serve practically three years for defrauding the Virginia Employment Fee out of $233,984 in COVID-relief unemployment funds and recruiting fellow prisoners to supply private info to file bogus claims.

The cash that Keith Scott Smith Jr., 41, diverted from unemployed employees in Virginia to himself and fellow inmates is a part of an estimated $40 million that the VEC believes it paid out through the pandemic to individuals who submitted fraudulent claims on behalf of inmates housed in state correctional amenities, in keeping with federal court docket papers filed in an analogous case.

“He took benefit of the system,” U.S. District Choose David J. Novak mentioned in feedback from the bench. “Throughout this tragic time, when the federal government was pumping cash out to individuals to outlive, you bought crooks in jail getting cash. That is ridiculous. I believe [Smith’s] conduct is completely offensive.”

The choose then queried Assistant U.S. Lawyer Kashan Pathan about why the federal government was recommending that Smith be sentenced on the low finish of discretionary federal sentencing tips, which referred to as for an lively time period of incarceration of between 30 and 37 months.

“I believe you’ll want to be extra aggressive on this COVID fraud,” Novak mentioned. “The crooks are getting all the cash to the detriment of working individuals. These criminals exploited the pandemic. The truth that this was dedicated whereas he was incarcerated makes it much more mind-boggling.”

Novak mentioned Smith’s conduct was so egregious that he’d be prepared to craft a punishment excessive above the rules, as much as 60 months. However after arguments by the prosecution and protection, the choose determined to remain throughout the tips, sentencing Smith to 33 months for his earlier responsible plea to conspiracy to commit mail fraud.

The punishment will run consecutive to a sentence of 20 years with 10 years suspended he acquired in April 2018 in Chesterfield County for maliciously wounding his former girlfriend.

Novak additionally ordered Smith to make restitution to the VEC within the quantity of $233,984.72.

Based on the federal government’s assertion of details, Smith and his spouse, Virginia Smith, devised a scheme that concerned him acquiring the names, dates of delivery and Social Safety numbers of sure inmates serving sentences with him on the Baskerville Correctional Middle in Mecklenburg County and passing that info to his spouse.

Virginia Smith then used the inmates’ private info to file no less than 22 fraudulent claims for unemployment insurance coverage and pandemic unemployment help from June 21, 2020, to no less than Jan. 2, 2021. The functions contained a false bodily deal with for the inmates, a false “final employer” and a false certification that the inmates had been prepared, prepared and in a position to work.

Following the submitting of the claims, the state mailed “Means 2 Go” debit playing cards to a submit workplace field designated by Virginia Smith, and the unemployment advantages had been distributed by the playing cards. Upon receiving the debit playing cards, Virginia Smith would hold a portion for herself as a fee for her involvement and would switch the rest to the inmates whose info she used to file the claims.

For instance, Virginia Smith would sometimes ship a number of the funds to the inmates’ monetary accounts on the jail. On different events, she despatched the funds to individuals related to the inmates.

To maintain the cash flowing, Virginia Smith would submit weekly recertifications of unemployment standing to the VEC for the functions she submitted on behalf of the inmates.

The federal government mentioned Keith Smith exercised “decision-making authority” within the conspiracy and offered course to his spouse on how the fraudulent proceeds had been to be distributed and used. In recorded cellphone calls at Baskerville Correctional Middle, the Smiths frequently mentioned the submitting of unemployment functions and the compensation inmates would obtain as a part of the fraud.

Smith “performed a crucial position in furthering the goals of the legal conspiracy by acquiring and offering [his wife] with the non-public figuring out info of the inmates, thereby enabling the [wife] to file extra fraudulent claims and steal more cash from the VEC,” Pathan wrote in sentencing memorandum for the federal government.

“The defendant’s incarceration didn’t hinder his potential to hold out this offense; relatively, it could have offered him distinctive entry and alternative to recruit different inmates, who, in mild of their incarceration, could have been extra prepared and wanting to share their private figuring out info in alternate for monetary help for themselves and/or their relations,” Pathan wrote.

The punishment Smith’s spouse acquired in November — simply someday in jail with 5 years of supervised launch — briefly turned a difficulty throughout Wednesday’s sentencing listening to for her husband. The choose questioned how Virginia Smith acquired such a light-weight punishment on her 4 convictions of mail fraud. “Nobody can do that alone,” mentioned Novak, referring to how Smith’s spouse helped him perform the fraud.

Smith’s lawyer, Lawrence Woodward, famous the “monstrous sentencing disparity” between the someday Smith’s spouse acquired and the 30 months really useful for her husband.

“Any narrative or suggestion that Ms. Smith acquired concerned as a result of she was scared or intimidated by [her husband] is solely not true or supported by the proof,” Woodward wrote in a sentencing memorandum. “She was not pressured or threatened in any manner and was a full and prepared participant in all the exercise that provides rise to this case.”

When requested to elucidate the discrepancy, Pathan informed the court docket that Virginia Smith had “ample mitigation” points, resembling childhood trauma and long-term substance abuse that led U.S. District Choose Robert Payne to conform to a downward variance in punishment. Sentencing tips referred to as for a time period of incarceration of 27 to 33 months, and the federal government really useful a time period of 18 months.