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Ozarks restaurant owner accused of Paycheck Protection Program fraud

Federal prosecutors from the Western District of Missouri say the IRS recently investigated John Michael Felts — the owner of Springfield-area restaurants including Taco Habitat, Bourbon & Beale, Hot Cluckers and White River Brewing Company — about a “scheme” to complete fraudulent applications for millions of dollars in Paycheck Protection Program loans.

The $659 billion Paycheck Protection Program gave loans to private businesses from 2020 through May of last year. The loans were paid for with taxpayer money. The goal of the Trump-era effort was to help companies keep their workers employed during the worst of the COVID-19 crisis.

But federal prosecutors say that after receiving large sums of PPP money, Felts spent hundreds of thousands of dollars derived from the loans on buying and improving home properties.

The U.S. Attorney’s Office wants the court to force Felts to forfeit four residential properties located in the Jones Spring neighborhood east of Springfield. He owns two of the properties personally, along with his spouse; the other two are owned by a company he controls, according to court papers.

Felts faces no criminal charges, a spokesperson for the U.S. Attorney’s Office confirmed when KSMU reached out on Thursday. He is not listed as a defendant in the government’s civil forfeiture action; the four residential properties are.

Fed allegations: Companies without employees, applications with fake identities

In court papers filed earlier this month, prosecutors say Felts used nine companies he owns or controls to apply for roughly 12 of the coronavirus relief loans.

But according to the feds, most of the companies weren’t doing business, or employing any workers, at the time Felts applied.

Prosecutors also accuse Felts of applying for at least 13 loans using faked identities.

KSMU reached Felts on Thursday by phone requesting a comment, but he referred all questions to his attorney, Abe McGull, who also serves as Springfield Zone 2 City Councilman. The Springfield Business Journal reported Wednesday that Felts said he was "a victim of identity theft.” Felts also reportedly said he believed his restaurants would not close due to the allegations against him.

McGull’s office provided a written statement to KSMU on Thursday:

“On September 13, 2022, members of the Internal Revenue Service executed search warrants for information and items concerning Mr. Michael Felts business dealings with an individual out of San Antonio, Texas. Mr. Felts has retained legal counsel to handle this matter and cannot comment further concerning this investigation.”
The 20-page forfeiture complaint does not mention anyone from San Antonio. When asked for more information about that aspect of McGull’s statement, his office sent a second statement:

“Rules of professional responsibility forbid me from commenting further about the ongoing investigation.”

Along with giving up the four residential properties, federal prosecutors asked the court that the government “be awarded its costs and disbursements in this action.”

U.S. District Court Judge M. Douglas Harpool is presiding over the case, online court records show.

Gregory Holman is a KSMU reporter and editor focusing on public affairs and investigations.