CT Business Owner Confesses: COVID Relief Funds Spent on Luxuries Like Travel, Jewelry, and Cars

A woman from East Granby has admitted to federal charges and will compensate through restitution for her involvement in a scheme where she allegedly swindled over $1.1 million from COVID-19 pandemic assistance programs.

Karen Gaston, aged 44, made an appearance at the federal court in New Haven on Thursday and chose to waive her right to receive an indictment, as stated in the document.
Office of the U.S. Attorney for the District of Connecticut
. She pleaded guilty to wire fraud and making illegal monetary transactions.

As reported by federal officials, in 2020, Gaston oversaw several enterprises; among these, at least one business was inactive and another served just a single customer. The list encompasses LNK, Elegant Clinical, Ruby Red LLC, and Diamond Shine LLC.

LNK and Diamond Shine LLC were functioning but utilized common resources and staff members, officials stated. Ruby Red LLC reportedly served just one client with Gaston being its only employee. According to authorities, Elegant Clinical was not operating anymore.

Starting around April 2020, Gaston applied for loans through the Paycheck Protection Program (PPP) and sought Economic Injury Disaster Loans (EIDL), both part of the CARES Act aimed at providing emergency funding during the coronavirus pandemic. According to federal authorities, the documents Gaston submitted misrepresented the operational state, assets, and workforce of the enterprises she managed. It was also reported that she allegedly filed loan requests with different banking entities as a way to conceal the actual extent of her unlawful actions, officials stated.

According to authorities, the loan applications misrepresented her enterprises as being operational when they weren’t. Additionally, they inaccurately stated the count of staff members and the salaries allegedly disbursed to these individuals. These false claims appeared in fake tax records and associated paperwork, officials noted. The authorities further alleged that Gaston portrayed a relative, listed as an applicant on the form, as a co-owner of one of her companies.

According to officials, Gaston allegedly obtained slightly over $1.1 million in PPP and EIDL loan funds via this scheme. Rather than utilizing these funds for payroll or operational costs as intended, she supposedly used them for personal expenses such as travel, dining, high-end household items, premium jewelry, vehicles, and even covering her home mortgage payments, stated the U.S. Attorney’s office.

Under the terms of her plea agreement, Gaston will provide complete restitution. Additionally, she consented to surrendering a $39,521 ring obtained from Harry Winston in July 2020.

Gaston is out on a $100,000 bail as she waits for her sentencing date, which hasn’t been set yet. She could face up to 30 years behind bars.