First Broward deputy sent to prison for COVID loan fraud that put $31,000 in her pocket

The first of 17 Broward Sheriff’s Office employees to be convicted at trial of fleecing a U.S. loan program for struggling businesses during the COVID-19 pandemic has been sentenced to just over a half year in prison.

Stephanie D. Smith, a former BSO deputy school resource officer, was found guilty in March of wire fraud charges for submitting falsified loan applications for two companies through the federal Paycheck Protection Program and fraudulently collecting tens of thousands of dollars that she spent on herself.

On Wednesday, federal prosecutor David Snider asked U.S. District Judge James Cohn to give Smith 10 months in prison. Her defense attorney, Johnny McCrary Jr., urged the judge to impose a probationary sentence with restitution like the punishment given to more than a dozen other BSO deputies who pleaded guilty rather than go to trial.

Cohn gave the 28-year BSO veteran a sentence of seven months and ordered her to surrender to prison and repay $31,108 to the federal government. Cohn, who presided over her Fort Lauderdale jury trial, also imposed a $2,000 fine.

Smith, 54, is the only one of the BSO deputies charged with PPP loan fraud or similar offenses to be sent to prison so far.

In 2021, Smith applied for loans as the registered agent for Childrens 1st Basketball Training Inc. and as the manager for Agape Smith Vending LLC, providing bogus payroll, revenue and tax records to a couple of banks that were handling her applications under the PPP loan program, the jury found. On April 1, Childrens 1st received $20,863 in a loan guaranteed by the Small Business Administration, and on May 11, Agape received $10,275 in a second loan also guaranteed by the SBA.

Smith, the sole proprietor of both Broward-based businesses, then fabricated information to show that she used the loan proceeds for her companies’ payroll and other purported legitimate expenses when, in fact, she spent the money on herself, according to prosecutors with the U.S. Attorney’s Office in Fort Lauderdale.

In October, Smith was among the group of BSO deputies and corrections officers arrested on charges of fraudulently receiving about $500,000 from the Paycheck Protection Loan and Economic Injury Disaster Loan programs. Both programs were approved by Congress as part of the CARES Act after the COVID-19 pandemic swept the nation in March 2020.

READ MORE: Ex-BSO lieutenant pleads guilty to fleecing hundreds of thousands from COVID loan program

‘Theft from the American people’

Although the total amount of lost loan money was relatively modest compared to dozens of other COVID-19 relief fraud cases in South Florida, the sheer number of law enforcement officers charged with breaking the law in one police agency stood out as shocking, authorities said. Most of the original 17 accused of defrauding the PPP loan program have pleaded guilty since their arrests in October. Those sentenced so far have been ordered to pay back their ill-gotten loan proceeds and have received probation ranging from one year to five years — with the exception of Smith.

Only one other BSO employee charged with pandemic loan fraud has gone to trial. But Miami federal jurors failed to reach a unanimous verdict at the trial of Carolyn Denise Wade, who was accused of bilking about $21,000 from the program. That led to a mistrial declared in late March by U.S. District Judge Donald Graham. Prosecutors plan to retry Wade, who was also represented by McCray, the Fort Lauderdale lawyer.

Last fall, Broward Sheriff Gregory Tony described the systemic PPP loan fraud activity in his agency as “theft from the American people.”

Internal investigation

He said that the investigation began in late 2021 with a probe of a single deputy, and evidence from that case led to an evaluation of the entire 5,500-employee agency. He said the internal probe found that 100 deputies and corrections officers applied for COVID-19 business loans, and a referral was made to the FBI and U.S. Attorney’s Office.

Of those, FBI agents found that 17 BSO employees broke the law by falsifying information about their businesses so they could qualify for the pandemic relief loans.

“I hated to see some of the names on that list,” Tony said during a news conference at BSO’s headquarters after the arrests. “Some of them were good officers.”

The crackdown on the BSO employees was led by the FBI and other federal agencies, along with prosecutors Marc Anton, Trevor Jones, David Snider and Bertha Mitrani.

South Florida has been a hotbed of PPP loan fraud committed by hundreds of business people and others charged with stealing millions from the government program by falsifying loan applications for their companies, including falsified employee, revenue, income and tax records. Several used their ill-gotten loans to buy expensive Lamborghini, Tesla, Porsche, Mercedes-Benz and Bentley vehicles

The Paycheck Protection Program allocated about $800 billion in loans through banks that were entirely guaranteed by the Small Business Administration and, in almost all instances, forgiven as long as the money was used for payroll and other legitimate overhead costs, according to the SBA.