A father and daughter have been charged federally with devising a scheme to misuse CARES Act money, which authorities say was actually used to fund lavish lifestyles instead of helping military veterans.
Kenneth L. Phillips, a 62-year-old retired lieutenant colonel in the U.S. Army, and his daughter, 30-year-old Danielle A. Phillips, both of Birmingham, are charged with conspiracy to commit fraud.
The charges were announced Thursday by Northern District of Alabama U.S. Attorney Prim Escalona and FBI Special Agent in Charge Carlton Peoples.
Kenneth Phillips is the founder and CEO of Priority Soldier Inc, which was started in 2010 to help military families by advocating, educating, and addressing critical issues affecting veterans and their families.
Danielle Phillips held various roles with PSI including chief operating officer and in-house legal counsel.
Charges against the pair state that in November 2020, they submitted a fraudulent proposal to the Alabama requesting COVID grant funding to operate an online program to assist veterans dealing with PTSD in coping with the then-ongoing COVID pandemic.
They received about $1.9 million dollars in funding, but rather than use the funds for their intended purpose, began transferring funds to their personal bank accounts, documents state.
After paying themselves a combined salary of more than $400,000 during the one month the program operated, authorities said, Kenneth Phillips and Danielle Phillips in January 2021 told the Alabama Department of Finance that PSI had spent all but $54,617.04, which they returned.
In reality, authorities said, more than $1.4 million remained 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, officials claim.
The government has entered into a plea agreement with both of the defendants. They still must appear before a judge to enter those guilty pleas.
The FBI investigated the case. Assistant U.S. Attorney Ryan S. Rummage is prosecuting the case.
The maximum penalty for conspiracy is five years in prison.
