Pewaukee man gets prison for leading COVID PPP money fraud scheme

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The mastermind of a fraud scheme that diverted COVID relief money meant for struggling businesses to phantom companies was sentenced Wednesday to nearly five years in prison and ordered to repay nearly $1 million.

Thomas Smith, 47, of Pewaukee, involved seven other people, including his brother, in a scheme to obtain more than $1.2 million in Paycheck Protection Program funds last year for businesses that weren’t in actual operation. 

“I guess I was just greedy,” Smith told his lawyer, Michael Steinle, according to Steinle’s remarks at sentencing.

It was honest, Steinle said, because there was no other explanation for why someone like Smith would do it. Smith wasn’t desperate or facing addiction issues. He’s a father of five, married 23 years, who started two successful businesses. He is considered a mentor and “go-to guy” at his longtime church.

U.S. District Judge Brett Ludwig told Smith he hoped his 57-month prison sentence and two years of supervision would let him get back on track as a contributing member of society.   

U.S. District Judge Brett Ludwig

Ludwig also ordered Smith to pay $960,000 restitution, the full amount of PPP money that was obtained by all the participants. Ludwig allowed Smith to report to federal prison at a later date.

Steinle said the real loss is more like $200,000 since most of the loan proceeds and the kickbacks to Smith were frozen before they were spent. Steinle suggested a year to 18 months was a sufficient prison sentence for Smith.



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