A South Burlington man will serve a year in prison for using false documents to obtain a loan through a federal Covid-19 aid program for businesses and then using the money to buy a house in Milton.
Dennis Duffy II, 40, was sentenced Monday in federal court in Burlington. Judge William K. Sessions III also ordered Duffy to serve two years of supervised release following his prison sentence, pay $191,000 in restitution and forfeit a Ford truck he bought with fraud proceeds.
Duffy, who will begin his prison sentence May 16, had earlier pleaded guilty to loan fraud and money laundering.
An 11-page indictment from July 2021 lays out the scheme Duffy used to cash in for himself, rather than his cleaning business, Night Owl Cleaning, through the federal Paycheck Protection Program.
According to the indictment, Duffy submitted false documents in June 2020 to the NorthCountry Federal Credit Union when he applied for more than $416,000 in PPP funds.
Among the false documents, the indictment stated, was a purported corporate 2019 tax filing showing gross receipts of more than $7.2 million and taxable income of $382,000. The actual tax returns for that year showed the cleaning business had less than $78,000 in gross receipts with a net profit of $15,785.
The indictment stated that Duffy signed a contract to buy a home in Milton for $385,000, using proceeds from the PPP loan.
Duffy’s case was the first pandemic-related fraud prosecution to be filed in Vermont federal court.