Fayetteville, Arkansas – A Florida couple formerly from Northwest Arkansas is facing serious consequences after pleading guilty to defrauding federal pandemic relief loan programs. Last week, Fawaad Welch, 41, and Julia Youngblood, 41, appeared before U.S. District Judge Timothy L. Brooks and entered guilty pleas tied to a scheme that involved false loan applications and the misuse of millions in funds intended to support struggling businesses during the COVID-19 pandemic.
Welch admitted guilt to wire fraud, while Youngblood pleaded guilty to misprision of a felony, which means she admitted knowing about the crime and helping to conceal it. Both defendants waived indictment and accepted responsibility through a criminal information filing.
Scheme Involved False Statements and Personal Spending
According to statements made in court and records from prosecutors, the fraud took place from May 2020 through October 2021. During this time, Welch and Youngblood submitted applications for multiple Pandemic Relief Loan Programs through their business, Slipstream Creative, LLC, based in Fayetteville, Arkansas.
In the applications, Welch allegedly provided false information regarding their business’s finances, including misleading claims about assets and liabilities. He also misrepresented how the funds would be used. Despite these false statements, Youngblood signed the loan documents on behalf of the company.
Once the funds were approved and deposited, prosecutors say Welch quickly diverted large portions of the money for personal use. The pair failed to disclose key details, such as existing tax debts and prior loans, which would have likely disqualified them or limited the loan amounts.
One striking example cited in court involved the Economic Injury Disaster Loan program, from which the couple received $1.5 million in October 2021. Within months, Welch transferred $1.3 million to their personal account and later used $445,000 to purchase a new home in Florida.
Additional Misuse of Main Street Loan Program Funds
The fraud did not stop there. According to plea documents, Welch also misused funds from the Main Street Loan Program. In response to questions from a banker about salary restrictions tied to the federal program, Welch falsely reassured the bank by saying, “Yes sir we do at 10k a month so all is good there. 5k a piece.” However, after receiving $3 million through that program, Welch quickly moved $950,000 from the business account directly into his own personal account.
Both Welch and Youngblood agreed in their plea deals that they were responsible for fraud that caused an intended loss of between $3.5 million and $9 million. The government has not yet determined the final restitution amount, which will be decided at sentencing.
Sentencing to Be Scheduled
A sentencing date will be set after the U.S. Probation Office completes a presentence investigation report. Welch faces a potential maximum prison sentence of 20 years, while Youngblood could receive up to three years. Both are also subject to possible fines, supervised release, and mandatory restitution payments to the government.
Judge Timothy L. Brooks will decide their fates at a later hearing after weighing federal sentencing guidelines and other legal factors.
This case highlights ongoing efforts by federal prosecutors to hold accountable those who abused pandemic relief programs meant to help businesses survive difficult times.
