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YOUNGSTOWN -- A Stow man who is in the nightclub business was sentenced to three years in federal prison after pleading guilty to a 15-count indictment in a scheme to defraud money through online wire transfer services at several area Walmart stores.
Prosecutors said Walmart transactions happened locally in Warren, Boardman and Liberty, and local banks targeted were in Poland, Canfield and Austintown.
John Lee Watkins Jr., 33, who also faces separate charges dealing with a scheme to collect CARES Act funds, was sentenced Thursday by U.S. Judge Benita Pearson of the Northern Ohio District Court. Watkins had pleaded guilty in May to one count of conspiracy to commit wire fraud and 14 counts of committing wire fraud.
He also was ordered to pay restitution of $325,413 jointly with co-defendants Valerie M. Masongsong and Terrell Tomlin.
Watkins, who also will pay a special $1,500 court cost, must be under three years of supervision upon his release from prison. Watkins is incarcerated in Mahoning County jail.
According to the indictment, Watkins and his two co-defendants were accused of illegally using Walmart2Walmart, a money transfer service in which a customer can initiate a money transfer at one Walmart store to be picked up by a person at another Walmart store anywhere in the U.S.
Watkins, Masongsong and Tomlin were accused of the crimes from Aug. 31, 2016, through Nov. 13, 2019, using false identities and reporting fraudulent transfers to their banks, the indictment states.
One such illegal transaction took place in May 2018 and was initiated by Masongsong at two Walmarts in Nevada. A few days later, Masongsong and Watkins contacted their bank to report the money transfers were fraudulent, after Watkins, posing as another man, picked up the money from Walmarts in Liberty Township and Stow. On May 30, 2018, Wells Fargo refunded Masongsong's account for the transfers.
Other Walmarts targeted by the trio's scheme included stores in Warren, Boardman, Streetsboro, Kent and Canton. Local banks also targeted by the scheme included Key Bank branches in Poland and Canfield, Chemical Bank of Poland, Farmers National Bank branches in Poland and Austintown and Woodforest Bank's location within the Austintown Walmart.
SEPARATE CASE
On Jan. 6, Watkins also pleaded guilty in a separate case before Pearson in the federal court in Youngstown involving wire fraud counts in which he allegedly defrauded about $120,000 in Coronavirus Aid, Relief and Economic Security Act funds from the U.S. government.
He pleaded guilty to one count of conspiracy to commit wire fraud and three counts of wire fraud. Pearson set sentencing for Watkins in that case for April 11.
In the indictment, Watkins and co-conspirator Tomlin were accused of applying for CARES Act money in April and July of 2020 for businesses that did not exist.
The indictment states one application falsely claimed that Watkins owned Diamond Nightlife, a bar with a business address on Wyndham Ridge Drive in Stow, that had been in business since Sept. 28, 2018, had employed 10 people, and had $132,900 in gross revenues and spent $3,000 on goods sold since that time.
"In reality, Diamond Nightlife never operated as a bar, and the revenue numbers provided on the application were fraudulent," the indictment states, noting the address listed for the business was an apartment in a multibuilding complex.
Based on false information, the Small Business Administration had approved the CARES Act application for Diamond Nightlife for $54,000 as well as an advance loan for $10,000.
In March 2021, Watkins had asked SBA for an additional $25,000 loan, but SBA did not fund that request, the indictment states.
The indictment also stated that Watkins made a false CARES Act application for Se7en Nightclub, a bar that the application stated had opened Aug. 1, 2018, had employed 11 people, had $135,000 in gross revenues and spent $22,450 in goods. That application had listed the business address for Se7en Nightclub at 1743 S. Raccoon Road in Austintown.
In reality, Se7en Nightclub ceased operations prior to Feb. 1, 2020, which was when the CARES Act program started, the indictment stated. Based on the false information, the SBA approved the application for Se7en Nightclub for $56,300.
The indictment stated Watkins applied for another SBA loan totaling $20,000 for the nightclub, but the additional amount was not funded by the government.