Woman, 67, admits to pandemic relief fraud

Scheme involved loan applications with false data

A 67-year-old Albany County woman pleaded guilty Thursday to federal wire fraud charges for fraudulently obtaining more than $1.6 million in relief loans intended to aid pandemic-ravaged businesses.

Debra Hackstadt “fabricated and grossly overstated” her number of employees, payrolls and sole proprietorships on information she gave on the 32 loan applications, according to a plea agreement filed in U.S. District Court. She admitted to two counts of wire fraud before Chief U.S. District Judge Glenn Suddaby.

Hackstadt, of Schoolhouse Road near the border of Albany and Guilderland, lied to the Paycheck Protection Program (PPP), whose federal governmentbacked loans are distributed by private banks and lenders, and to the U.S. Small Business Administration, which issues Economic Injury Disaster Loans, prosecutors for U.S. Attorney Carla Freedman said.

Under the federal Coronavirus Aid, Relief, and Economic Security Act enacted in March 2020, small businesses hurt by the COVID-19 pandemic could obtain PPP loans to use on mortgages, rent, utilities and payroll costs up to $100,000 per employee annually. The businesses needed to certify that they were operating as of Feb. 15, 2020, and had paid employees or contractors as of that date. The businesses also had to certify their number of employees and payroll expenses, the plea agreement said.

The EIDLS, which covered expenses such as

rent, utilities and fixed debt payments, allowed recipients to be advanced up to $10,000 that did not have to be repaid to the government. Would-be recipients, who applied online, were required to certify under penalty of perjury their number of employees, gross revenues and cost of goods sold for the 12-month period preceding the pandemic, the plea agreement said.

On Thursday, Hackstadt admitted that between April 30, 2020, and June 11, 2021, she schemed to obtain 27 PPP loans and five EIDLS for a total of $1,615,546. Hackstadt submitted applications online from her home that were issued to her,

family members and acquaintances and several companies controlled by Hackstadt or family members, her plea agreement stated.

“The defendant committed this fraud by making materially false representations to the SBA and various PPP lenders on loan applications, including by fabricating and grossly overstating the number of employees and payrolls of the companies for which she obtained loans,” the plea agreement stated. It said Hackstadt personally obtained $254,812.

On one PPP loan application, Hackstadt claimed a company had eight employees and that its total wages, tips and other compensation for the third quarter of 2019 was $146,100 and that it had seven employees and a total of $117,300 for the fourth quarter of that year. But Hackstadt knew the company had “significantly fewer employees and lower total wages, tips and other compensation in the relevant time periods when compared to the figures that she falsely represented on loan application,” the plea agreement said.

Hackstadt falsely claimed on one EIDL that a male relative earned $62,212 as a sole proprietor in the year before the pandemic when the person’s 2019 tax return made no reference to such a job. And Hackstadt claimed another person was in “health services” when she knew it was untrue, the plea agreement said.

In addition, Hackstadt admitted that she fraudulently obtained two other business loans from private lenders of $42,290 in the fall of 2019 and a $48,500 loan in June 2021. Hackstadt, who defaulted both times, applied for the loans under false pretenses by lying about the revenues and receivables of two companies — neither of which was operating at the time.

Hackstadt technically faces up to 20 years in prison under her pleas, but would likely face a far less stringent punishment under federal sentencing guidelines. She agreed to waive an appeal on any sentence of three years or less in prison.

The case, investigated by the FBI in Albany, is being prosecuted by Assistant U.S. Attorneys Michael Barnett and Joshua Rosenthal. Hackstadt’s attorney is Jonathan Cohn. Cohn declined to comment.

Sentencing is set for Oct. 6. Hackstadt will have to pay restitution and a forfeiture money judgment of $254,812.