$3.5 Million COVID Loan Scandal Explodes as 3 Southern Californians Plead Guilty to Fraud Scheme

Riverside, California — Three Southern California residents have pleaded guilty to their roles in a scheme that prosecutors say fraudulently obtained approximately $3.5 million in COVID-19 economic relief loans. The defendants allegedly submitted false Paycheck Protection Program applications and recruited more than 100 other people to participate.

The defendants were identified as Daryl D. Knighten Jr., 34, of Perris; Vanessa M. Williams, 37, of Corona; and Denise Mata, 36, of Moreno Valley.

According to prosecutors, the scheme operated between March 2021 and August 2021, as the defendants allegedly targeted the federal PPP loan program created to provide financial assistance to businesses during the COVID-19 pandemic.

Fake Applications Were Used to Obtain PPP Loans

Prosecutors said the defendants submitted fraudulent PPP loan applications for themselves, family members, close associates and people they recruited into the scheme.

The applications allegedly contained false claims that applicants were self-employed and would use the money for legitimate business purposes.

Court documents also alleged that the applications included fabricated tax forms designed to persuade participating lenders to approve and distribute the loans.

The fraudulent applications were eventually approved, prosecutors said, resulting in loans being issued to the three defendants and their associates, as well as more than 100 alleged co-schemers.

The money was then deposited into bank accounts controlled by the defendants and people associated with the scheme.

Prosecutors Say Kickbacks Followed the Loan Payments

The alleged scheme did not end once the loans were deposited.

According to prosecutors, people who received the funds subsequently paid kickbacks to the defendants within days of receiving their loan money.

The arrangement allegedly allowed the defendants to benefit financially from applications submitted by other participants. Court documents stated:

“Knighten, Williams, Mata, and their co-schemers used the illicitly obtained money for their own personal benefit and not for expenses allowable under the PPP,”

Prosecutors estimated that the overall scheme resulted in approximately $3.5 million in losses to the PPP loan program. The government alleges the money was not used for the legitimate business expenses the program was designed to support.

Three Defendants Admit Their Individual Loss Amounts

The three defendants entered their guilty pleas separately in September 2026.

On Sept. 22, 2026, Williams and Mata pleaded guilty to one count of wire fraud. Two days later, on Sept. 24, Knighten Jr. also pleaded guilty to one count of wire fraud.

As part of their respective admissions, the defendants acknowledged causing significant losses to the federal loan program. Knighten admitted to causing at least $145,550 in losses. Williams admitted to causing at least $187,497 in losses.

Mata admitted to causing at least $201,642 in losses. Those amounts represent the losses attributed to each defendant individually as part of the broader alleged scheme.

Defendants Face Up to 20 Years in Federal Prison

The three defendants are scheduled to appear for sentencing on Jan. 14, 2027. Each faces a potential sentence of up to 20 years in federal prison on the wire fraud charge.

The eventual sentences will be determined by the federal court after considering the circumstances of each case and the applicable sentencing rules.

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The guilty pleas bring the criminal proceedings against the three defendants closer to a conclusion, but the broader case is not over.

Fourth Defendant Plans to Fight the Charges

A fourth defendant, Mikhail G. Hoalim, 35, of Moreno Valley, has pleaded not guilty and is accused of participating in the alleged fraud scheme.

Hoalim faces nine counts of wire fraud and is scheduled to go to trial on Nov. 9.

Unlike Knighten, Williams and Mata, Hoalim has not pleaded guilty to the allegations against him. His case will therefore proceed separately as prosecutors continue pursuing the charges.

The case highlights how fraudulent applications for pandemic relief continued to generate federal investigations and prosecutions even years after the emergency loan programs were created.

What do you think about the alleged use of fake applications and tax documents to obtain COVID relief funds? Share your thoughts on the case in the comments below.