Developer from Vancouver gets 2 in prison years for COVID-19 relief fraud

A real estate developer from Vancouver was sentenced Friday to nearly two years in federal prison for fraudulently obtaining COVID-19 relief funds and laundering the money.

Michael James DeFrees, 62, pleaded guilty in October in U.S. District Court in Oregon to bank fraud, money laundering and two counts of wire fraud. In addition to his prison sentence, a judge also ordered him to forfeit $1.2 million and pay $1.3 million in restitution to the U.S. Small Business Administration, according to a U.S. Attorney’s Office news release.

Between April 2020 and April 2022, DeFrees claimed Economic Injury Disaster Loans and Paycheck Protection Program loans for two businesses under false pretenses, the news release states.

Prosecutors said that on applications for the loans, DeFrees claimed he was the sole owner of two businesses — construction company Gateway National Corporation in Washington and real estate development company Yacht Harbor in Oregon — and that he had never been convicted of a crime or placed on parole or probation. But investigators say that when he submitted the applications, he was serving a term of probation for a 2017 Washington conviction for falsifying records in a bankruptcy proceeding.

Once he received the loan payments, DeFrees then laundered some of the money through a third business, according to the U.S. Attorney’s Office.

“Michael DeFrees’ crimes demonstrated his indifference to both the many businesses suffering the economic effects of the COVID-19 pandemic and American taxpayers who funded the relief programs created to alleviate these impacts,” Ethan Knight, chief of the U.S. Attorney’s Office’s Economic Crimes Unit, said in the news release. “Prosecuting COVID-19 fraud remains a top priority for the Department of Justice and our partners.”