Show-Me State Times

A St. Louis attorney has admitted to defrauding the U.S. Small Business Administration (SBA) out of $379,900 by improperly obtaining and using a COVID-19 pandemic relief loan.

John J. Diehl Jr., 60, pleaded guilty in U.S. District Court in St. Louis to one count of wire fraud. According to court documents, Diehl applied for an Economic Injury Disaster Loan (EIDL) on March 30, 2020, on behalf of his law firm, the Diehl Law Group. The EIDL program was established to provide low-interest loans to small businesses affected by the pandemic for use as working capital and other business expenses.

Diehl signed a loan authorization form certifying that the funds would be used solely for business purposes related to economic injury from the pandemic. However, after receiving an initial $1,000 advance on April 16, 2020, he made a payment of $1,320.15 to a country club for personal dues and charges using those funds.

On June 9, 2020, Diehl received an additional $93,900 from the EIDL loan into his firm's bank account. He then transferred some of these funds into his personal accounts and used them between June 10, 2020, and August 16, 2021 for various unauthorized personal expenses such as payments on personal vehicles including Tesla, Audi and Jeep automobiles; credit card bills; home mortgage payments; college tuition for a family member; pool maintenance; country club fees; and cash withdrawals for personal use. On September 16, 2020, he also moved $50,039.55 of EIDL proceeds into his law firm's retirement plan where he was the only participant.

In March 2022, Diehl requested a modification of his EIDL loan and again pledged that the funds would be used to address economic injury caused by disaster. On April 12, 2022, an additional $285,000 was wired into the Diehl Law Group’s account. He subsequently transferred some of this money into his personal accounts and continued making unauthorized payments including credit card bills; legal fees paid to another St. Louis law firm for a personal matter; college tuition; residential mortgage payments; and further cash withdrawals for personal use. On September 16, 2022 he transferred another $150,000 from these modified loan proceeds into his retirement plan.

In total Diehl obtained $379,900 in EIDL funds through this scheme.

He is scheduled to be sentenced on December 19. Wire fraud carries a maximum penalty of up to twenty years in prison and/or a fine up to $250,000. According to his lawyer he has repaid the full amount of EIDL proceeds back to the United States Treasury.

The FBI conducted the investigation with Assistant U.S. Attorney Hal Goldsmith prosecuting the case.