Small business owner who bilked feds out of $472,000 through fraudulent loans gets 18 months (2024)

Adolphus Obioha told a federal judge he made an honest mistake when he applied for a pair of small-business loans totaling more than $426,000 during the height of the COVID-19 pandemic. In his loan documents, the 65-year-old Nigerian naturalized citizen pledged to use all of the aid money to keep his driving school along Airline Highway afloat.

But federal authorities said he sent a more than $170,000 to relatives overseas and spent some of the other loan proceeds to buy property and purchase a personal vehicle.

U.S. District Judge Brian Jackson sentenced Obioha to 18 months in federal prison during a hearing Thursday inside the Russell B. Long Federal Building and U.S. Courthouse.

The judge also gave Obioha three years of court supervision after he is released from prison and ordered him to repay the U.S. Small Business Administration $472,000 in restitution. That is the amount federal authorities estimate Obioha cost the government agency through his fraudulent acts.

Obioha pleaded guilty to a single count of theft of government funds on Feb. 26. Court records show he applied for small-business loans through the Economic Injury Disaster Loan Program, which was expanded during the global pandemic to help entrepreneurs struggling to cover their payroll expenses.

Obioha immigrated to the United States in 1983 at the age of 25 and went to Southern University, where he earned his bachelor’s and master’s degrees. In 1997, he launched the AA Academy & Driving Institution, a driving school that also billed itself as a medical transport business.

In June 2020, he applied for a $100,000 EIDL loan, which the Small Business Administration approved. The federal agency subsequently disbursed about $104,000 to Obioha’s business accounts, and he agreed to use the funds as “working capital” for his business, court indictments said. But in November 2020, Obioha withdrew $32,500 from the business account and used it to buy a vacation rental house in his native Nigeria.

Months later, he made three wire transfers totaling about $12,000 to his Nigerian brother-in-law overseas.

Federal prosecutors said Obioha “doubled down” in April 2021, when he applied for another $312,000. The SBA approved his loan application and disbursed another $323,000 into his business account, court documents showed. This time, Obioha wired his overseas brother-in-law $160,000 and withdrew $12,000 to buy himself a car.

Obioha apologized, and his attorney, Dele Adebamiji, asked the judge to spare the aging business owner with failing health any prison time.

“He knows he made a very grave error, and he’s doing everything he can to amend that error,” Adebamiji said.

Justin Woodard, an assistant chief of the U.S. Department of Justice’s criminal fraud division, noted that Obioha reapplied for more loan dollars after securing the first six-figure endowment.

“This was not a mistake; it was a concerted effort,” Woodard said.

Judge Jackson said Obioha expressed remorse when questioned by a probation officer during his presentencing investigation. But he claimed to be unaware that he was committing a federal felony at the time, telling the officer, “I did not know what I was doing.” Jackson was skeptical of that claim.

“There was no mistake. You were absolutely calculated in what you were doing,” the judge said.

He later chided Obioha for breaking the law in the United States, a country where he raised a family and managed to send multiple children to college.

“You did very, very well in this nation,” the judge said. “In my view, you should feel indebted to this nation for opening its arms and accepting you and providing you with the opportunities that most people across the globe would love to have. But you didn’t do that. You took advantage of this nation.”

Jackson ordered Obioha to surrender to federal authorities by June 24.