A former Phoenix cop is accused of stealing $1,276,500 through a federal program meant to help struggling businesses survive the coronavirus pandemic.
Officer Toni Richardson spent paycheck protection program money on personal expenses, according to a federal indictment filed on Wednesday. Because PPP loans are forgivable, they are, in effect, grants for qualifying expenses such as employee payroll.
Richardson faces federal charges of conspiracy, bank fraud, and money laundering. She was arrested on December 1, and resigned from the force shortly thereafter, a police spokesperson said.
In February, while she was still on the Phoenix police force, Richardson and her business partner submitted a PPP loan application for a Glendale-based nonprofit, The Lotto Club, according to the indictment.
The organization was owned by Richardson, the application affirmed, and she served as its president and CEO.
The Lotto Club had major payroll expenses: 85 employees and monthly labor costs of upwards of $500,000, she claimed in her loan application.
The Lotto Club, according to filings with the state, was incorporated in 2015 as a "social club." In 2021, an annual report listed it as a "charity for veterans."
But before the loan was issued, the charity had no employees and conducted no business, according to the FBI.
The payroll ledger that the organization provided was fake, federal prosecutors allege. A bank account that was opened in The Lotto Club's name after the organization received the loan had an original balance of $0, and had no history of processing payroll.
"Defendants knew The Lotto Club had zero employees and that it paid no salaries or payroll taxes to any employees or independent contractors," the indictment says.
Richardson's business partner, Blu Mitchell, took out a $200,000 check in his own name, as well as a later $25,000 transfer. Mitchell, it appears, runs multiple nonprofits in the Phoenix area, including Sigma C.U.T.S., which purports
to do a wide variety of philanthropic work across the U.S.
PPP loan fraud has been widespread. One law office tracking cases of Covid relief fraud has compiled hundreds of cases
nationally of PPP loan fraud, including several cases in Arizona.
In March, a Mesa resident was charged with multiple counts of fraud when he allegedly fabricated documents to obtain a PPP loan, and then bought a Porsche, according to court documents.
Richardson joined the force in 2017, according to city salary data. She had previously worked
as an officer in Atlanta and California.
A spokesperson for the U.S. District Attorney for Arizona said the office would not comment on a pending matter.
Andrew Williams, a Phoenix police spokesperson, told Phoenix New Times
Thursday that the department did not plan to investigate internally, given that Richardson had left the force.
"The city of Phoenix takes allegations of criminal conduct by our employees very seriously," Williams said in a statement. "The alleged actions of this employee go against the core values of the city and everything we stand for as public servants."