A Georgia man was sentenced to five years in federal prison Friday for conspiring to commit wire fraud and to defraud the Internal Revenue Service (IRS).
As part of his sentence, U.S. District Judge Marcia Morales Howard also entered an order of forfeiture for $1.5 million, the proceeds of the wire fraud conspiracy.
Kevin Edward Hargrave, a/k/a “Kevin Edward Wade,” of Locust Grove, Georgia, was also ordered to pay restitution to his victims, including $418,115 to the IRS.
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Hargrave entered a guilty plea on October 4, 2022.
According to court documents, Hargrave controlled a number of companies, including WSA Optimization Firm, Inc., that purported to offer “credit repair services” to the public.
Hargrave promoted these services through multiple company-specific websites, radio advertising, emails, text messages, and posts on YouTube.com and other social media sites.
These marketing campaigns promised to “erase bad credit” information from consumers’ credit reports within 90 days – “guaranteed.” Notwithstanding these promises, multiple customers reported to federal investigators that they paid for credit repair services, saw no such results, and were denied refunds.
When an undercover federal agent called to inquire about these credit repair services, he was told that WSA Optimization used “federal laws to remove all negative derogatory items off your credit.”
Further, the agent was told “we are able to remove those items off your credit without you paying [creditors] back.” A company representative also claimed that WSA Optimization employed a team of 5 attorneys and 23 paralegals who worked to remove negative credit information from credit reports.
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In reality, Hargrave did not employ a team of attorneys or paralegals.
Instead, supposedly to improve its customers’ credit scores, company representatives would send form letters to each credit reporting agency and falsely claim that all negative credit information on the customers’ credit reports was the product of identity theft or fraud.
These letters – which did not disclose that they were mass produced by WSA Optimization – were sent in envelopes listing a fictional return address.
An analysis of bank records established that more than $8 million in deposits were made into the business bank accounts controlled by Hargrave and a family member, and that significant funds were diverted from those accounts to pay for luxury vehicles, mortgage payments on their residence, personal credit cards, jewelry, items at retail stores, utilities, restaurants, and other living expenses.
For example, funds were used to make over $128,000 in mortgage payments on Hargrave’s residence in Fernandina Beach, which he sold in 2022 for $870,000. Similarly, approximately $300,000 was used to make down payments and monthly financing payments on automobiles owned by Hargrave and a family member, including a Lamborghini Gallardo, a Rolls Royce Wraith, a Porsche Boxster, a Range Rover, a Ford F-150, and two Mercedes Benz vehicles.
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An analysis of Hargrave’s real and personal property, certain business records, credit card statements, and the bank records collectively demonstrate that his joint tax returns for tax years 2016 through 2019 underreported taxable income and improperly claimed certain business expenses. A financial investigator with the IRS estimated that since 2015, by underreporting his and a family member’s tax liability, Hargrave has caused the United States to lose approximately $418,115 in tax revenue.
“It was clear that Mr. Hargrave believed the law did not apply to him,” stated IRS Criminal Investigation Acting Special Agent in Charge Lani Rosado-Espinal. “Despite being in the midst of a global pandemic, he stole millions of dollars from vulnerable people, who were struggling financially and defrauded the IRS. IRS-CI and the FBI will continue to partner with the United States Attorney’s Office to identify, investigate and assist in the prosecution of criminals like Mr. Hargrave, whose greed leads them to prey on others, including U.S. taxpayers.”
“Fraud and corruption pose a fundamental threat to our national security and our way of life,” said Michael C. Malsch, Assistant Special Agent in Charge of the FBI Jacksonville Division. “The FBI is committed to coordinating with our partners and aggressively pursuing those who take advantage of others for their personal gain. This sentencing should serve as a warning to others who might engage in these types of schemes.”
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