CITIZEN STAFF REPORT

LEXINGTON — A Lexington man has been sentenced to 37 months in prison for obtaining Economic Injury Disaster Loans (EIDL) under false pretenses, U.S. Attorney Carlton S. Shier IV announced Monday. Neal Harris, 57, was sentenced by U.S. District Judge Karen Caldwell for eight counts of wire fraud. His co-defendant, Kelly Harris, 64, was sentenced July 2 to 46 months in prison for the same charges.

The Harrises were convicted of all wire fraud charges following a four-day jury trial in March. Evidence presented at the trial showed that from May 5, 2020, to July 25, 2020, the Harrises submitted false applications to the Small Business Administration (SBA) to obtain EIDL funds for five businesses they claimed were impacted by the COVID-19 pandemic.

The couple claimed their businesses had a total revenue of $1.4 million in 2019, but none were operational that year. The only business that existed before the pandemic, Ruby Bailey Family Service Center, had dissolved in 2019. Despite this, the Harrises sought over $450,000 in loans and obtained $357,600 in disaster relief funds for three of the businesses.

In August 2020, a local bank detected the fraud and secured the remaining funds in the business accounts. After the bank returned the fraudulently obtained funds, Neal and Kelly Harris submitted additional fraudulent documentation to the SBA in an attempt to reclaim the funds. At sentencing, both were found to have obstructed justice by providing false testimony during the trial.

Under federal law, the Harrises must serve 85% of their prison sentences. Upon their release, they will be supervised by the U.S. Probation Office for two years.

The investigation was conducted by the U.S. Postal Inspection Service (USPIS) and the Treasury Inspector General for Tax Administration. Assistant U.S. Attorney Kate Smith is prosecuting the case.