‘This is the most outrageous behavior I’ve ever seen’

‘This is the most outrageous behavior I’ve ever seen’

ALBANY — A Guilderland Woman who swindled more than $1.6 million in pandemic-related relief loans intended to help businesses in need was sentenced to a year and four months behind bars on Tuesday as a judge called her crime “the most outrageous conduct I have ever seen.”

Debra Hackstadt, 68, who indeed fabricated and grossly exaggerated her employee, payroll and individual business numbers in 32 loan applications, must pay $1,696,324 in restitution under the sentence imposed by US District Judge Glenn Suddaby. The judge also imposed two years of supervised release. when the Hackstadt prison term ends.

Hackstadt pleaded guilty in May to two counts of wire fraud. She had been a victim of the Paycheck Protection Program (PPP), whose loans are issued by private financial institutions and backed by the US government, and the Economic Injury Disaster Loans (EIDL) issued by the Administration. of US Small Businesses

On Tuesday, Hackstadt and his attorney, Jonathan Cohn, petitioned Suddaby for clemency. The judge was told Hackstadt experienced a traumatic and abused childhood, thyroid and kidney cancer and the April 2019 death of her husband of almost 47 years.

“I’m so sorry. I was trying to help my family,” Hackstadt told Suddaby through tears, as half a dozen relatives and supporters watched from a courtroom bench. “I just panicked. I wasn’t really thinking when I asked for the loans.”

Cohn asked the judge to consider a sentence other than jail time. The attorney said his client paid more than $154,000 of the money owed (an amount the judge later called “tiny”).

“She is 68 years old. This is not an intellectual criminal,” said the lawyer.

The judge told Hackstadt that many people experience difficulties in life.

“The difference,” Suddaby added, “is that they are not committing fraud and lying at 68. There is no justification for this behavior.”

Due to Hackstadt’s age, lack of a criminal record, and acceptance of responsibility, Suddaby dipped below sentencing guidelines that called for a sentence of between 33 and 41 months. She told Hackstadt that she defrauded lenders and the government for her own benefit.

“This is the most outrageous conduct I have ever seen, there is simply no excuse or explanation,” he said, adding that Hackstadt’s past “does not justify this behavior in any way.”

The judge allowed Hackstadt to report to prison the first week of January.

“You represent a very unusual case,” the judge told the defendant, adding that “it’s not something I normally do.”

In all, the Hackstadt scheme led the agencies to issue 27 PPP and EIDL loans totaling $1,615,546, according to federal prosecutors in Albany.

“The defendant defrauded loan programs that provided urgent financial lifelines to legitimate business owners and their employees, in the midst of a crippling pandemic,” Assistant U.S. Attorneys Joshua Rosenthal and Michael Barnett stated in a pre-sentencing recommendation to Suddady. , “While countless others suffered from the economic effects of the pandemic, the defendant viewed the PPP and EIDL program as opportunities to participate in a widespread illegal scheme.”

Prosecutors said the loans went to Hackstadt, her relatives and acquaintances, and companies she or her relatives controlled. They said Hackstadt lied to the Small Business Administration and PPP lenders by making up or grossly exaggerating the number of employees and payroll for which she borrowed.

In addition, prosecutors said Hackstadt admitted to defrauding two financial lenders in connection with deals to buy purported accounts receivable from a company that no longer exists. In 2019, he fraudulently reaped $42,290 by falsely claiming to a lender that one of his businesses made $180,000 in annual gross sales.

“But, as the defendant knew when she made these false claims, the business had no operations and no revenue,” prosecutors told Suddaby.

And in 2021, prosecutors said, at the same time Hackstadt was applying for pandemic relief funds, he fraudulently received $48,500 from a second lender who had provided false bank statements and tax documents falsely showing that a company controlled by Hackstadt had significant business income. when I had none. Hackstadt promptly defaulted on both loans, causing the lenders to lose a combined $80,778.

Prosecutors said that prior to 2019, Hackstadt had five bankruptcy filings in 16 years, in addition to civil lawsuits.

“This prelude to the defendant’s far-reaching fraud during the pandemic demonstrates that the flood of pandemic aid only amplified the defendant’s existing desire to commit crimes,” prosecutors told the judge. “The court ruling should send a strong message not only to this defendant but also to all would-be fraudsters that this type of misconduct will have serious consequences.”

Federal prosecutor Carla Freedman called the crime a “prolific fraud,” adding, “He took advantage of an economically devastating pandemic and stole money meant for legitimate businesses struggling to stay afloat.” Janeen DiGuiseppi, the special agent in charge of the FBI’s Albany field office, said in a statement that Hackstadt “took more than a million dollars from worthy companies that desperately needed support.”

Leave a Comment