Former Eagles running back, Delaware native charged with COVID fraud

On By Littum

game

Wendell Smallwood Jr., a former NFL running back for the Philadelphia Eagles and a Wilmington-area native, has been charged with fraud related to COVID-19 relief programs, according to court documents.

Federal prosecutors allege that Smallwood submitted fraudulent information to government agencies to receive tens of thousands of dollars in payments tied to companies he controlled. They also allege he participated in a kickback conspiracy with others designed to defraud COVID-19 relief funds and lied to the IRS, 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 sentence of 50 years in prison, although defendants with no criminal convictions like Smallwood rarely receive such severe sentences if convicted.

Smallwood has not yet been arraigned and has not entered a plea in the case. A hearing on this is scheduled to take place 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 spokesman 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 Collection Documents

In 2020, as the COVID-19 pandemic raged, the federal government approved several relief programs to disburse trillions of dollars to help small businesses and households cope with the economic shutdown brought on 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 allege that Smallwood applied for this program using “defunct or newly incorporated businesses” and submitted fraudulent information about the businesses’ operations from May 2020 to June 2021.

Under that program, prosecutors allege he received $46,000 in what they describe as “fraudulent” loan proceeds. The complaint states the funds were not used for 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 such as wages, rent and utilities. The program helped 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 individual to file fraudulent filings in the names of 13 separate sole proprietors. The filings either falsely stated the company’s existence or inflated the company’s operations and generated $269,000 in revenue, according to the complaint.

Smallwood and the unnamed conspirator arranged kickbacks from the sole proprietors who received the loan proceeds, prosecutors allege. He personally received kickbacks ranging from $4,000 to $12,000, according to prosecutors.

He is also charged with a tax fraud conspiracy, in which prosecutors allege 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 those filings, according to prosecutors.

The criminal complaint against Smallwood was signed by prosecutors on October 28. It is unclear when it was lifted and made available on the court’s public docket.

One of thousands of COVID fraud cases

Smallwood’s case is not unique and is a pittance in comparison the extent of other allegations of COVID-19 fraud.

Federal prosecutors have alleged COVID-19 fraud against unsophisticated cons, a highly organized group of dozensand doctors, medical manufacturers, a reality TV star and one person who wanted an expensive Pokémon card.

Locally, a former University of Delaware student was accused of fraudulently receiving about $1.4 million in COVID-19 loans to fake businesses.

In April was The Department of Justice’s COVID-19 Enforcement Task Force reported that authorities fighting COVID-19 fraud had charged more than 3,500 people with federal crimesrecovered more than $1.4 billion in stolen pandemic funds and reached more than 400 civil settlements and verdicts.

In June 2023, 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 multiple programs in the COVID era.

The report estimated that about 17% of the $1.2 trillion paid out from the two programs linked to Smallwood’s case went to “potentially fraudulent actors.”

Contact Xerxes Wilson at (302) 324-2787 or [email protected].