Show-Me State Times

An Independence, Missouri woman has pleaded guilty in federal court to participating in a fraud scheme that targeted the U.S. Small Business Administration and several state governments.

Cathy M. Kelley, 69, admitted to knowingly receiving stolen government funds. According to her plea, in September 2020 she received $59,900 in Economic Injury Disaster Loan proceeds from the U.S. Small Business Administration after another individual submitted a fraudulent application for the funds. Kelley then used the money for personal expenses and made large cash withdrawals.

Kelley also acknowledged that during 2020 and 2021 she knowingly received stolen unemployment benefits from multiple states, including Washington, Massachusetts, Colorado, Florida, Kansas, California, and Nevada. She accepted these benefits—knowing they were obtained through fraud—into financial accounts under her control and via numerous state-issued debit cards sent to her residence. Kelley converted these funds for her own use and for others. As part of her plea agreement, she admitted that the stolen unemployment benefits included federal funds and that she received at least $250,000 in stolen funds over the course of her conduct.

"Under federal statutes, Kelley is subject to a sentence of up to 10 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of Kelley will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing has been scheduled for Jan. 6, 2026."

The case is being prosecuted by Assistant U.S. Attorney Nicholas P. Heberle following an investigation by the U.S. Department of Homeland Security Office of Inspector General, U.S. Department of Labor Office of Inspector General, and U.S. Postal Inspection Service.