Wendell Smallwood Jr., a former NFL running back for the Philadelphia Eagles and a Wilmington-area native, has been charged with fraud tied to COVID-19 relief programs, according to court documents.
Federal prosecutors claim that Smallwood submitted fraudulent information to government agencies in order to receive tens of thousands of dollars in payments tied to businesses he controlled. They also claim he engaged in a kickback conspiracy with others aimed at defrauding COVID-19 relief funds and lied to taxing authorities, according to a criminal complaint filed by prosecutors in the District of Delaware.
He is charged with three felonies: wire fraud, conspiracy to commit wire fraud, and conspiracy to defraud the Internal Revenue Service. The charges carry a maximum of 50 years in prison, though defendants with no criminal convictions like Smallwood are rarely given such severe punishment if found guilty.
Smallwood has not yet been arraigned and has not entered a plea in the case. A hearing for that is scheduled to occur in December.
“Wendell has cooperated fully with this investigation. We will have more to say when we appear in December,” said Mark B. Sheppard, a Philadelphia-area attorney representing Smallwood.
The case was brought by prosecutors under David Weiss, the U.S. Attorney for the District of Delaware. Kim Reeves, a spokesperson for Weiss, declined to comment on the case.
From 2016: Delaware native Wendell Smallwood: ‘Football saved my life’
Smallwood played high school football at Red Lion Christian Academy in Bear. He was drafted by the Philadelphia Eagles in 2016 and played five seasons in the league with three different teams through 2020.
What the feds claim in the charging documents
In 2020 as the COVID-19 pandemic raged, the federal government approved several relief programs to disburse trillions of dollars intended to help small businesses and households weather the economic shutdown brought about by the health crisis.
One such program was the Economic Injury Disaster Loan program, which offered low-interest loans to small businesses to cover specific expenses.
Federal prosecutors claim that Smallwood applied to that program using “defunct or recently registered businesses” and submitted fraudulent information about the businesses’ operations from May 2020 through June 2021.
Wendell Smallwood presented a check for $15,000 to Wilmington’s parks and recreation to help build a score board at the newly renovated Eden Park football field in 2019.
Under that program, prosecutors claim he received $46,000 that they describe as “fraudulent” loan proceeds. The complaint states the funds were not spent on business expenses and were partially withdrawn as cash from ATMs in Delaware and surrounding states, according to the criminal complaint.
Prosecutors also accuse him of submitting false information to the Paycheck Protection Program, another COVID-era relief program that offered forgivable loans to cover business expenses like payroll, rent and utilities. The program aided small businesses as well as businesses owned and operated by a single person, known as a sole proprietor.
Editor’s Note: Read a copy of the criminal complaint at the end of this story.
The criminal complaint states that Smallwood conspired with another, unnamed person to submit fraudulent applications in the names of 13 separate sole proprietors. The applications either falsely stated the existence of the business or inflated the business’s operations and generated $269,000 in proceeds, according to the complaint.
Smallwood and the unnamed conspirator arranged kickbacks from the sole proprietors receiving those loan proceeds, prosecutors claim. He personally received kickback payments ranging from $4,000 to $12,000, according to prosecutors.
He is also accused of a tax fraud conspiracy in which prosecutors claim he recruited tax filers in Delaware and elsewhere and prepared tax documents that included lies about things like income. About $110,000 in tax refunds were issued by the IRS tied to these applications, according to prosecutors.
The criminal complaint against Smallwood was signed by prosecutors on Oct. 28. It is unclear when it was unsealed and made available on the court’s public docket.
One of thousands of COVID fraud cases
Smallwood’s case is not unique and is small-money compared to the scale of other COVID fraud allegations.
Federal prosecutors have claimed COVID-19 fraud against unsophisticated cons, a highly organized group of dozens, as well as doctors, medical manufacturers, a reality television star and a person who wanted a pricey Pokémon card.
Locally, a former University of Delaware student was accused of fraudulently receiving some $1.4 million in COVID loans for sham businesses.
In April, the Justice Department’s COVID-19 Enforcement Task Force reported that authorities policing COVID fraud had charged more than 3,500 people with federal crimes, recovered more than $1.4 billion in stolen pandemic funds and reached more than 400 civil settlements and judgments.
In June 2023, the Office of the Inspector General for the Small Business Administration − the agency responsible for administering the programs in Smallwood’s case − estimated that it disbursed more than $200 billion in potentially fraudulent loans and advances across several COVID-era programs.
The report estimated some 17 percent of the $1.2 trillion disbursed from the two programs tied to Smallwood’s case went to “potentially fraudulent actors.”
Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com.
Criminal complaint by Xerxes Wilson on Scribd
This article originally appeared on Delaware News Journal: Former Eagles running back, Delaware native charged with COVID fraud