Owner of closed Elgin restaurant charged with fraudulent use of COVID-19 relief funds
A Lake in the Hills woman whose Elgin restaurant closed in early March has been indicted on federal fraud charges for applying for and receiving more than $175,000 through the Paycheck Protection Program for COVID-19 financial relief after her business, Gifford's Kitchen & Social, had already laid off all its employees, according to an indictment.
Melissa Turasky, 43, has been charged with one count of bank fraud and one count of making false statements to a financial institution, according to information released Friday by the U.S. Attorney's Office's Northern District of Illinois.
Turasky's arraignment in U.S. District Court in Chicago has not yet been scheduled.
The indictment of Turasky was announced by John R. Lausch Jr., U.S. Attorney for the Northern District of Illinois, and Christopher Diiorio, Special Agent-in-Charge of the U.S. Secret Service Chicago Field Office. The U.S. Small Business Administration also participated in the investigation.
"The Paycheck Protection Program was designed as a lifeline for small businesses struggling to survive the COVID-19 pandemic," Lausch said in a written statement. "Our office is committed to working with our law enforcement partners to root out abuse of the important relief programs established under the CARES Act."
The Paycheck Protection Program allows qualifying small businesses and other organizations to receive loans with a maturity of two years and a low interest rate of 1%. Proceeds must be used for payroll costs, interest on mortgages, rent, and utilities. The program allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within 24 weeks and use at least 60% of the forgiven amount for payroll.
According to the indictment, Turasky owned Gifford's Bar and Restaurant, which did business as Gifford's Kitchen and Social. In early March, Gifford's was no longer operating and had been evicted from its rental space. By the end of March, all employees had been terminated, the indictment states.
Turasky applied for and obtained $176,822 in Paycheck Protection Program funds by submitting a fraudulent loan application to a bank, according to the indictment. Turasky provided figures approximating Gifford's monthly payroll and other business expenses to make it falsely appear that Gifford's continued to have payroll and business operating expenses, the indictment states.
The bank fraud and false statement charges are each punishable by up to 30 years in federal prison.
When Gifford's opened in May 2018, the building was officially owned by Melissa Turasky's husband and business partner, Rich Turasky, according to records.
Rich Turasky filed a bankruptcy petition for 2300 Bushwood LLC on Jan. 20 in U.S. Bankruptcy Court for the Northern District of Illinois, records show. Prescient Capital Partners, the mortgage lender that took over ownership of the property, filed a motion to dismiss Rich Turasky's petition on Feb. 27, saying he had filed in "bad faith."
Rich Turasky bought the building in 2016. Ownership of the property was transferred last year in a deed in lieu of foreclosure to Prescient Capital Partners, from which 2300 Bushwood LLC had borrowed $4.6 million in 2017, Kane County records show.
An overdue tax bill of $62,373 for the property was sold in October to Longstreet Capital Funding, LLC, of Chicago, which could take ownership if there is no repayment by Nov. 1, 2021, John Emerson, director of Kane County's tax extension department, said in March.