NJ Resident Sentenced for Multi-Million Dollar COVID-19 Fraud

Perth Amboy Man Receives 33-Month Prison Term for Exploiting Federal Relief Programs

NEWARK, NJ – Arlen G. Encarnacion, a 38-year-old resident of Perth Amboy, New Jersey, has been sentenced to 33 months in prison for his involvement in schemes that fraudulently secured over $2.1 million in federal aid, according to U.S. Attorney Philip R. Sellinger. The conviction addresses fraudulent activities surrounding the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) designed to assist businesses impacted by the COVID-19 pandemic.

Encarnacion's guilty plea to conspiracy to commit wire fraud and money laundering was accepted by U.S. District Judge Georgette Castner, marking a significant legal outcome in efforts to combat pandemic-related financial crimes. This sentencing follows the guilty pleas of Jacquelyn Pena and Kent Encarnacion, both associated with the case and sentenced to probation for their roles in the fraudulent activities.

The U.S. Attorney emphasized the importance of holding individuals accountable who seek to exploit emergency relief efforts intended for those significantly affected by the pandemic. The schemes orchestrated by Encarnacion and his co-conspirators misdirected funds away from small businesses in dire need of financial support during unprecedented times.

The CARES Act, enacted in March 2020, provided the legal foundation for the relief efforts Encarnacion exploited. By submitting false applications for PPP and EIDL loans, Encarnacion and his associates generated millions in illegal proceeds under the guise of supporting struggling businesses. These actions not only violated federal laws but also deprived genuine businesses of crucial financial assistance.

In addition to the prison sentence, Judge Castner imposed a three-year term of supervised release on Encarnacion and ordered restitution totaling $2.18 million. The comprehensive investigation leading to Encarnacion's sentencing was a collaborative effort among various federal, state, and local law enforcement agencies, underscoring the seriousness with which authorities are addressing COVID-19 fraud.

Assistant U.S. Attorney Mark C. Orlowski represented the government in this case, highlighting the dedication of the U.S. Attorney’s Office’s Health Care Fraud Unit to prosecuting those who undermine public trust and federal assistance programs. The sentencing of Arlen G. Encarnacion serves as a stern reminder of the legal repercussions awaiting those who engage in pandemic-related fraud.