Anchorage businesswoman gets 3.8 years for nearly $1 million in COVID relief fraud

Nearly $1 million in COVID-19 relief funds meant to help struggling small businesses survive the pandemic went instead to personal spending. Anchorage businesswoman Cheryl Labrie, who orchestrated the scheme, was sentenced to 3.8 years in federal prison, the U.S. Attorney's Office for the District of Alaska announced.

Prosecutors said Labrie lied on federal loan applications and stole identities to obtain money through the Paycheck Protection Program and the Economic Injury Disaster Loan program, both administered by the Small Business Administration. She spent the funds on personal expenses rather than payroll and other business costs, prosecutors said.

Funding for both programs was limited, the office said, and when it ran out, thousands of small-business applications were left pending and never funded.

Labrie was indicted in January 2024 on wire fraud, bank fraud and money laundering charges tied to nearly $1 million obtained through multiple EIDL and PPP loans and advances over roughly a year. The following month, the office named white-collar financial crime, including fraud against pandemic aid programs such as PPP, EIDL, Restaurant Revitalization Funds and Shuttered Venue Operator Grants, a prosecution priority. It noted that three COVID-19 fraud cases had been indicted since September 2023 following task force investigations.

Alaska has seen other pandemic-fraud sentencings. A Chickaloon man, Christopher Staggs, was sentenced to two years for a scheme that obtained more than $170,000 through PPP and Pandemic Unemployment Assistance. Nationally, as of Dec. 31, 2023, U.S. Attorneys' Offices had criminally charged about 3,500 defendants in 2,388 pandemic-fraud cases.

The SBA Office of Inspector General estimated in 2023 that the agency disbursed more than $200 billion in potentially fraudulent pandemic loans. The Government Accountability Office found fraud indicators on 3.7 million of 13.4 million recipients, cautioning that such indicators "are not proof of fraud" without further review and investigation. Defense attorneys who handle these cases say some PPP and EIDL prosecutions may involve good-faith confusion or reliance on professionals amid rapidly changing program rules, rather than intentional fraud.