Northern District of Alabama | Veterans Charity CEO and Attorney Charged with $1.9M Fraud Conspiracy
BIRMINGHAM, Ala. – A father and daughter have been charged with devising a scheme to misuse CARES Act funds, announced U.S. Attorney Prim F. Escalona and Federal Bureau of Investigation Special Agent in Charge Carlton L. Peeples.
An information filed yesterday in United States District Court charges Kenneth L. Phillips, 62, of Birmingham, and Danielle A. Phillips, 30, of Birmingham, with conspiracy to commit wire fraud.
According to the information, Kenneth Phillips, a retired Lieutenant Colonel in the U.S. Army, was the founder and CEO of Priority Soldier, Inc. (PSI). His daughter, attorney Danielle Phillips, held various roles with PSI including Chief Operating Officer and in-house legal counsel. PSI’s stated mission is to strengthen military families by advocating, educating, and addressing critical issues affecting veterans and their families.
The information alleges that in November 2020, the defendants submitted a fraudulent proposal to the State of Alabama requesting COVID-19 grant funding to operate an online program to assist veterans dealing with PTSD in coping with the then-ongoing COVID-19 pandemic. The defendants received approximately $1.9 million dollars in funding, but rather than use the funds for their intended purpose, began transferring funds to their personal bank accounts. After paying themselves a combined salary of more than $400,000 during the one month the program operated, the defendants in January 2021 represented to the Alabama Department of Finance that PSI had spent all but $54,617.04, which they returned. In reality, more than $1.4 million remined in the PSI bank account, which the defendants used to purchase personal items such as luxury sports cars, watches, and diamond jewelry for their own personal benefit.
In conjunction with the charge, the government also filed a plea agreement with both Kenneth and Danielle Phillips. Both must appear before a judge to enter a guilty plea.
The maximum penalty for conspiracy is five years in prison.
The FBI investigated the case. Assistant United States Attorney Ryan S. Rummage is prosecuting the case.
An information contains only charges. A defendant is presumed innocent unless and until proven guilty.
