When the U.S. was in short supply of toilet paper and life-saving personal protective equipment at the height of the coronavirus pandemic, federal prosecutors said a 35-year-old contractor in Virginia promised to deliver.
Robert S. Stewart Jr., who now lives in Alabama, was sentenced Wednesday to one year and nine months in federal prison after he pleaded guilty to defrauding multiple government agencies last year, the U.S. Attorney’s Office for the Eastern District of Virginia said in a news release on Wednesday.
Stewart is accused of procuring close to $39 million in government contracts for N95 masks he couldn’t deliver, fudging applications for COVID-19 emergency relief loans and lying about his military service to obtain extra benefits.
His defense attorney, Robert Lee Jenkins Jr. of the law firm Bynum & Jenkins PLLC, told McClatchy News on Wednesday Stewart knows what he did was wrong.
“We certainly are grateful that the period of incarceration was not longer,” Jenkins said. “At the same time, we are disappointed that the judge chose to sentence him to 21 months. From our perspective, the recommended sentencing range didn’t take into account some of the mitigating factors that we thought really warranted a greater amount of consideration from the judge.”
Jenkins had requested a period of home confinement for his client, saying Stewart already paid back the money he is accused of fraudulently obtaining and just completed his first year of law school while fathering a young son.
The government, however, had requested a two-year prison sentence, calling his crimes “offensive and insulting.”
Orders for millions of masks went unfilled
Stewart waived his right to an indictment and pleaded guilty to the charges against him in early February, court documents show.
Prosecutors laid out the alleged fraud in three parts, starting with $38.5 million worth of government contracts Stewart procured with the Department of Veterans Affairs and the Federal Emergency Management Agency for N95 masks he said he had readily available.
In emails with government officials, he is accused of falsely saying he had the masks “on hand” in warehouses in Virginia and Pennsylvania.
Stewart subsequently received a $35 million contract with the VA for six million N95 masks and a $3.5 million contract with FEMA for 500,000 masks, according to court documents.
Prosecutors said he asked for extensions to deliver the masks before the agencies ultimately canceled the contracts. The government didn’t incur any losses because Stewart was only going to be paid after the masks were delivered.
In federal court documents filed almost a year later, prosecutors said Stewart knew “that he had little or no realistic prospect of providing the life-saving PPE.”
But Stewart’s attorney said he “didn’t start out with the intent to defraud anyone.”
“He honestly thought that despite the fact that the contract required him to have the PPE materials on hand, he was just so confident that he could gain access to the materials that he misrepresented that he already had them,” Jenkins told McClatchy News.
“He got in over his head and he understands that there is a price for him to pay for the wrong that he committed.”
Using one fraud to help pay for another
Around the same time Stewart procured the government contracts, prosecutors said he applied for funds through the Paycheck Protection Program and Economic Injury Disaster Loans program.
PPP loans were implemented under the Coronavirus Aid, Relief, and Economic Security Act that passed in March 2020 and were designed to help small businesses keep workers on the payroll amid widespread shutdowns. The CARES Act also extended eligibility under the preexisting EIDL program for businesses experiencing hardships during the pandemic.
Stewart is accused of lying on both his applications for the relief funding by overstating the number of employees that worked for him and how much he paid them.
In doing so, prosecutors said he was given $805,000 in PPP loans and $261,000 from the EIDL program for a total of more than $1 million in COVID-19 relief.
The government said Stewart used some of the money for his own personal expenses — including renting a private jet to try and find N95 masks, ProPublica reported. A reporter from the media outlet accompanied Stewart on the jet for a 36-hour journey last year in which he attempted to fulfill his end of the government deal.
A deceptive past
During the course of the investigation, prosecutors also uncovered discrepancies in Stewart’s military history.
Stewart is an Air Force veteran. But for seven years starting in 2013, prosecutors said he also held himself out as a former Marine. In order to obtain benefits, he said he was a corporal who received numerous medals and commendations, including the Rifle Expert Badge and the Kuwaiti Liberation Medal, the government said.
He received a total of $73,722 in medical benefits from the VA as a result, according to court documents.
“The undeniable fact is that Mr. Stewart made some false representations about certain subject matters I understand are very sensitive to many individuals,” his attorney said Wednesday. He did not serve in the Marines.
Stewart paid a total of $348,714.50 in restitution before he was sentenced, covering both the COVID-19 relief loans and the fraudulent VA benefits.
In accepting a plea deal, his attorney said Stewart was hopeful he’d be allowed to continue attending law school and care for his son.
“Mr. Stewart didn’t come into court expecting not to be punished, he didn’t come into court expecting to avoid a period of incarceration,” Jenkins said. “He only asked the court to fashion a punishment not to disturb those things. From our perspective that’s not what the court did.”
Under the terms of his plea agreement, Stewart can’t appeal the judge’s sentencing decision. But he has requested to be placed in a federal facility close to Alabama, where he moved prior to being charged.