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Former Assistant Superintendent for Catholic Archdiocese of Washington, DC pleads guilty to fraud, embezzlement

Officials say the man used the money to buy a yacht, a rowhouse in Northeast DC and a luxury sports sedan.

WASHINGTON — A 43-year-old D.C. man pleaded guilty to fraudulently obtaining more than $2 million in federal Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL). 

According to a press release from the United States Attorney’s Office D.C., Kenneth Gaughan of Washington, D.C., also admitted to embezzling another $438,000 in funds from the Catholic Archdiocese of Washington, D.C., where he was previously employed as Assistant Superintendent. 

Officials said Gaughan would sometimes use an alias of Richard Strauski to target federal funds from at least March 2020 through August 2020. According to the government’s evidence, Gaughan sought millions in PPP loans on behalf of nine companies. He received $2.1 million in PPP and EIDL funds.

PPP loans were created through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The loans were meant to be used by businesses and organizations for payroll costs, interest on mortgages, rent and utilities during the COVID pandemic. EIDL loans were part of a program run by the Small Business Administration. They were designed to help businesses and organizations facing hardship in 2020. 

In the case of embezzlement, officials said Gaughan admitted to defrauding the Archdiocese of Washington of more than $438,000.

Gaughan worked for the Archdiocese as its Director of Counseling starting in 2008 and was later promoted to Assistant Superintendent. 

Beginning in at least June 2010, officials say Gaughan caused the Archdiocese to pay invoices manufactured by Gaughan purportedly for anti-bullying and crisis intervention programs, as well as for software used to send mass messages to Archdiocese students and families. He would then conceal his ownership and control of the three companies, using an alias.

Officials say Gaughan used the money from the two programs, in part, to buy a $300,000 yacht, a $1.13 million rowhouse in Northeast, Washington and a $46,000 luxury sports sedan.

“While small businesses were struggling to stay afloat, Kenneth Gaughan stole taxpayer dollars to fund his lavish lifestyle, home, car, and yacht,” said U.S. Attorney Graves.  “These emergency funds were intended to help our small businesses weather the COVID-19 pandemic, not line the pockets of fraudsters. Yet this defendant brazenly undertook his scheme even after stealing hundreds of thousands of dollars from his former faith-based employer.”

Gaughan was arrested for fraud on Aug. 11, 2020. He pleaded guilty in the U.S. District Court for the District of Columbia to one count of wire fraud and one count of money laundering in the PPP and EIDL case, and one count of wire fraud in the case involving the Archdiocese. 

“Mr. Gaughan was so emboldened by deceiving a church for several years he then turned his deception to the government, stealing funds that were meant to be a lifeline for struggling businesses and greedily using them to satisfy his own materialistic desires,” said FBI Special Agent in Charge Sobocinski.  “The FBI, and our law enforcement partners, will continue to diligently investigate these crimes of fraud and hold those individuals accountable.”

Gaughan is scheduled to be sentenced on June 15, 2022. The wire fraud charge carries a statutory maximum of 20 years in prison. and the money laundering charge carries a maximum of 10 years in prison.

Gaughan will be required to pay restitution for the PPP and EIDL fraud in the amount of $2,182,465 and to the Archdiocese in the amount of $438,200, as well as a forfeiture money judgment.  

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