Quick Answer: Two more COVID relief fraud cases hit federal courts in March 2026 — a Missouri man sentenced to 5 years for stealing $148,000 through a fake EIDL application using a stolen military identity, and a former Nevada county commissioner indicted for stealing $500,000+ in PPP, EIDL, and Restaurant Revitalization Fund money. These cases matter to legitimate EIDL borrowers because they show DOJ is still actively investigating COVID relief fraud years after the programs closed — and if you’re struggling with a legitimate EIDL loan, your options are different from someone who committed fraud.
Why I’m covering this: Every week I hear from small business owners who took legitimate EIDL loans during COVID and now can’t make payments. They’re terrified because they see headlines about fraud prosecutions and wonder if they’ll be next. The answer is no — struggling with a legitimate loan is not fraud. But understanding the difference matters, because it affects which options are available to you.
Case 1: Missouri — 5 Years for Stolen Identity EIDL Fraud
Jason Roath, 56, of Independence, Missouri, was sentenced to 5 years in federal prison on March 11, 2026. He submitted a fraudulent EIDL application using the stolen identity of a U.S. Navy Chief Petty Officer — fabricating the business name, employee count, revenue, and all identifying information to steal approximately $148,000 in CARES Act funds.
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This isn’t a case of a struggling business owner making a mistake on their application. This was identity theft layered on top of loan fraud.
Case 2: Nevada — Former County Commissioner, $500K+ in Relief Funds
Leonardo Blundo, a former Nye County Commissioner (2019-2022), was indicted on March 11, 2026 on 5 counts of wire fraud and 2 counts of money laundering. Federal prosecutors allege he stole more than $500,000 in COVID-19 relief funds — PPP loans, EIDL, and Restaurant Revitalization Fund grants — intended for his Pahrump restaurant by inflating revenues, payroll, and employee counts and submitting fabricated tax returns.
According to the indictment, Blundo diverted the funds to personal investment accounts and cryptocurrency rather than using them for the restaurant’s operations.
What This Means If You Have a Legitimate EIDL Loan
If you took an EIDL loan in good faith during COVID and your business is now struggling to repay it, these fraud cases do not apply to you. There is a massive legal difference between:
Fraud: Fabricating a business, inflating revenue, using stolen identities, or diverting funds to personal accounts. This is what gets you indicted.
Not fraud: Taking a legitimate EIDL loan, using it for your business, and now being unable to repay because your revenue didn’t recover. This is a debt problem, not a criminal problem — and you have options.
If you have a legitimate EIDL loan you can’t repay:
- SBA Offer in Compromise: The SBA accepts reduced lump-sum settlements on EIDL loans through its OIC program
- Hardship accommodation: Contact the SBA to discuss reduced payment plans
- Bankruptcy: EIDL loans can be discharged in bankruptcy. If you signed a personal guarantee (loans over $200,000), Chapter 7 can eliminate both the business and personal liability
- Talk to someone independent: If you’re not sure which path makes sense, do me a favor and talk to Damon Day — he understands EIDL situations and the first conversation is free Damon Day, an independent debt coach and my co-host on the Get Out of Debt Guy podcast, whom you can reach at DamonDay.com — I receive no payment for this referral.
The Bottom Line
DOJ is still prosecuting COVID relief fraud in 2026 — these cases involve identity theft, fabricated businesses, and funds diverted to cryptocurrency. If you took a legitimate EIDL loan and can’t repay it, that’s a completely different situation. You have options including SBA offers in compromise, hardship accommodations, and bankruptcy. Don’t let fraud headlines scare you out of exploring the legal protections available to you.
FAQ
Can I go to jail for not paying my EIDL loan?
No. Failing to repay a legitimate loan is not a crime. Fraud — fabricating information on the application, using stolen identities, or diverting funds — is a crime. If you took the loan honestly and used it for your business, your inability to repay is a civil debt matter, not criminal.
Is the SBA still pursuing EIDL collections?
Yes. The SBA has referred defaulted EIDL loans to the Treasury Department for collection, which can include wage garnishment, tax refund offsets, and referral to private collection agencies. But the SBA also offers hardship accommodations and Offers in Compromise for borrowers who can’t pay.
Free Tool — Wage Garnishment Calculator: Worried about your paycheck being seized? The free Wage Garnishment Calculator shows exactly how much creditors can legally take in your state — and some states prohibit garnishment entirely. Calculate My Risk →
Can EIDL loans be discharged in bankruptcy?
Yes. EIDL loans are treated as general unsecured debt in bankruptcy and can be fully discharged. If you signed a personal guarantee (required for EIDL loans over $200,000), bankruptcy can eliminate both the business and personal liability.
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