29-04-2025
NWA business owners plead guilty to $6.1 million pandemic fraud scheme
FAYETTEVILLE, Ark. (KNWA/KFTA) — A Florida couple formerly of Northwest Arkansas pleaded guilty April 28 to defrauding Pandemic Relief Loan Programs.
According to a press release, Fawaad Welch, 41, pleaded guilty to wire fraud and Julia Youngblood, 41, pleaded guilty to misprision of a felony related to the scheme.
According to court documents and statements made in court, between May 2020 through October 2021, Welch and Youngblood applied for Pandemic Relief Loan Programs through their Arkansas business, Slipstream Creative, LLC, a former Fayetteville advertising and marketing company.
The release says throughout the applications, Welch provided the lenders with false statements regarding their assets and liabilities and the intended use of funds received through the United States Small Business Administration's 7(a) loans, Economic Injury Disaster Loan and Main Street Loan Programs. Youngblood signed the application on behalf of the business.
The release says that after receiving the loan funds, Welch diverted large parts of the loan proceeds for the personal benefit of the couple. In the applications, the couple did not disclose material information such as tax liabilities and the fact that they were receiving loans from other loan programs.
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According to the release, within months of receiving $1.5 million in 'working capital' Economic Injury Disaster Loan funds in October 2021, Welch transferred $1.3 million of that loan to the couple's personal bank account. The couple then bought a home in Florida using $445,000 of the funds.
Generations Bank asked if Welch and Youngblood take salaries and told them that 'the Fed restricts changes to your salaries with the [Main Street Loan Program] and doesn't allow distributions.' Welch replied, 'Yes, sir, we do at 10k a month, so all is good there. 5k a piece.' After receiving the $3 million in program funds, within a month, Welch had transferred $950,000 in Main Street Loan Program funds out of the business and to himself.
The release says that as part of the plea agreement, the couple will be held accountable for more than $3.5 million but less than $9 million in intended loss.
Welch and Younblood will be sentenced at a later date. Welch faces a maximum of 20 years in prison, and Younblood faces a maximum of 3 years in prison.
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