Wendell Smallwood Jr., a former NFL running back for the Philadelphia Eagles and a native of the Wilmington area, has been charged with fraud related to COVID-19 relief programs, according to court documents.
Federal prosecutors say Smallwood submitted falsified information to federal agencies to obtain tens of thousands of dollars in payments owed to businesses he controlled. They also said he conspired with others to defraud funds for COVID-19 relief and lied to tax authorities, according to a criminal complaint filed by prosecutors in the District of Delaware.
He faces three counts: wire fraud, conspiracy to defraud, and conspiracy to defraud the Internal Revenue Service. The charges carry up to 50 years in prison, although innocent defendants like Smallwood rarely receive such a harsh sentence if convicted.
Smallwood did not appear in court and did not enter a guilty plea. A hearing is scheduled for December.
“Wendell is cooperating fully with this investigation. We will have more to say when we come forward in December,” said Mark B. Sheppard, the Philadelphia attorney representing Smallwood.
The case was brought by prosecutors under David Weiss, U.S. Attorney for the District of Delaware. Kim Reeves, a spokeswoman for Weiss, declined to comment on the case.
As of 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 in 2020.
What the feds want in charging documents
In 2020 as the COVID-19 pandemic raged, the federal government approved several multi-billion dollar relief programs aimed at helping small businesses and households weather the economic downturn caused by the health crisis.
One such program was the Economic Disaster Loan program, which provided low-interest loans to small businesses to meet certain expenses.
Federal prosecutors said Smallwood applied to the program using “defunct or newly registered businesses” and submitted false information about the businesses’ operations from May 2020 to June 2021.
Wendell Smallwood presented a $15,000 check to Wilmington Parks and Recreation to help build a scoreboard at the newly renovated ballpark at Eden Park in 2019.
Under that scheme, prosecutors say he received $46,000 in what they described as “fraudulent” loans. The complaint says the money was not used for business expenses and was partially withdrawn as cash from ATMs in Delaware and surrounding counties, according to the criminal complaint.
Prosecutors also accused him of submitting false information to the Paycheck Protection Program, another COVID-19 relief program that provides loan forgiveness to cover business expenses such as wages, rent and utilities. This program has helped small businesses and businesses owned and operated by one 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 alleges that Smallwood conspired with another, unnamed individual to file fraudulent applications in the names of 13 independent individuals. The applications either falsely stated the existence of the business or inflated the business’s operations and received a profit of $269,000, according to the complaint.
Smallwood and an unnamed co-conspirator orchestrated kickbacks from sole proprietors who received those loans, prosecutors said. He personally received payments ranging from $4,000 to $12,000, according to prosecutors.
He is also accused of conspiracy to commit tax fraud in which prosecutors say he hired tax filers in Delaware and other states and prepared tax returns that included false information about things like income. About $110,000 in tax refunds were issued by the IRS related to these claims, according to prosecutors.
The criminal complaint against Smallwood was signed by prosecutors on October 28. It is unclear when it was opened and when it was found in the court’s public docket.
One of thousands of cases of COVID fraud
Smallwood’s case is not unique and relatively small compared to the scale of other alleged COVID frauds.
Federal prosecutors have sought the fraud of COVID-19 against unusual crimes, a highly organized group of dozens, as well as doctors, medical manufacturers, a reality television star and a person who wanted an expensive Pokémon card.
Locally, a former University of Delaware student was accused of obtaining $1.4 million in COVID loans for fake businesses.
In April, the Justice Department’s COVID-19 Enforcement Task Force reported that authorities working on COVID-19 fraud charged more than 3,500 people with federal crimes, recovered more than $1.4 billion in stolen pandemic funds and reached settlements and sentences of more than -400.
In June 2023, the Small Business Administration’s Office of Inspector General — 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 to several programs in the COVID-19 era.
The report estimated that about 17 percent of the $1.2 billion disbursed in two schemes related to Smallwood’s case went to “potentially fraudulent actors.”
Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com.
Xerxes Wilson’s criminal complaint on Scribd
This article originally appeared in the Delaware News Journal: Former Eagles running back, Delaware native charged with COVID fraud
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