A Charlotte, North Carolina, man pleaded guilty Nov. 2 to making false claims against the federal government after seeking hundreds of thousands of dollars in COVID-era tax credits and loan proceeds, U.S. Attorney Michael DiGiacomo announced.
Kareem Highsmith, 51, pleaded guilty before U.S. Magistrate Judge Michael J. Roemer to making false, fictitious or fraudulent claims against a government agency, a crime that carries a maximum penalty of five years in prison and a fine of $250,000, DiGiacomo said.
DiGiacomo said Highsmith electronically filed multiple IRS Form 941s claiming Employee Retention Credits (ERC) and Paid Sick and Family Leave Credits (PSFLC) for CMK Transportation and Delivery Service LLC, a company he owned. On July 3, 2022, Highsmith filed a Form 941 for the quarter ending June 30, 2020, falsely stating CMK employed four paid people and requesting refunds of $84,395.96. The IRS issued a check for $77,743.97. CMK did not have operations or employees in the second quarter of 2020 and was not entitled to a refund, the U.S. Attorney’s Office said.
Highsmith submitted 10 additional Form 941s for CMK for quarters from Sept. 30, 2020, through Dec. 31, 2022, falsely claiming three or four paid employees on each form. Those filings sought $799,623.15 in refunds, of which he received about $324,636.81, the office said.
According to the U.S. Attorney’s Office, Highsmith also helped other businesses submit fraudulent Form 941s seeking ERCs and PSFLCs. Those returns sought roughly $2,452,360.19 in refunds, of which approximately $603,572.21 was paid to business owners; Highsmith received about $78,700 for assisting with the filings.
Between May 8, 2020, and Dec. 28, 2021, Highsmith submitted three Paycheck Protection Program loan applications and four Economic Injury Disaster Loan applications on behalf of companies he owned, including CMK, the office said. Those applications contained material misrepresentations about employees, revenues and cost of goods sold. He sought $443,672.57 in loan proceeds and received $197,839.57.
The U.S. Attorney’s Office put the total loss amount from Highsmith’s conduct at $3,780,051.87. Sentencing has not been scheduled.
The case is being prosecuted by Assistant U.S. Attorney Douglas A.C. Penrose after an investigation by the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-in-Charge Harry Chavis. The U.S. Attorney’s Office said the prosecution is part of the Department of Justice’s broader fraud enforcement efforts and supports the federal Task Force to Eliminate Fraud.
