United States v. Neal Harris: Materiality, Perjury-Based Obstruction, and Sophisticated Means in COVID‑19 EIDL Fraud

I. Introduction

This unpublished Sixth Circuit opinion, United States v. Kelly Harris; Neal Harris (styled by the user as United States v. Neal Harris), arises out of fraud on the federal COVID‑19 Economic Injury Disaster Loan (“EIDL”) program. The case involves two married defendants, Kelly and Neal Harris, who submitted a series of online EIDL applications for purported small businesses that, as the jury found, were largely sham entities.

The case is important not because it announces new black-letter law—indeed, the panel explicitly designates the opinion “NOT RECOMMENDED FOR PUBLICATION”—but because it applies well-settled doctrine to a contemporary context: pandemic relief fraud. The opinion illustrates how:

• Traditional wire-fraud standards apply to EIDL applications, even where the SBA used relaxed verification procedures;
• Trial testimony by a defendant can support a perjury-based obstruction-of-justice enhancement under U.S.S.G. § 3C1.1;
• Repeated, multi-entity COVID-relief fraud with post-hoc documentation and cash withdrawals can qualify as “sophisticated means” under § 2B1.1(b)(10)(C); and
• Within-Guidelines sentences for COVID-relief fraud are insulated from substantive reasonableness challenges, especially where deterrence and lack of remorse loom large.

The principal issues on appeal were:

• Whether the evidence was sufficient to support the Harrises’ wire-fraud convictions;
• Whether Kelly’s trial counsel’s performance was so deficient as to require reversal on direct appeal;
• Whether the district court erred in applying:
  • an obstruction-of-justice enhancement to Kelly for perjury; and
  • a “sophisticated means” enhancement to Kelly for the nature of the fraud scheme; and
• Whether the within-Guidelines sentences (46 months for Kelly; 37 months for Neal) were substantively unreasonable.

The Sixth Circuit (Judge Mathis, joined by Judges Griffin and Thapar) affirmed in all respects.

II. Summary of the Opinion

The court’s holdings can be summarized as follows:

1. Sufficiency of the evidence (both defendants): The panel held that a rational jury could find beyond a reasonable doubt that both Kelly and Neal devised a scheme to defraud the SBA and acted with specific intent to deprive the SBA of money, satisfying the wire-fraud elements under 18 U.S.C. § 1343.
2. Ineffective assistance of counsel (Kelly): The court declined to address Kelly’s ineffective-assistance claim on direct appeal, holding that the record was insufficiently developed and that such a claim should proceed, if at all, in a § 2255 proceeding.
3. Procedural reasonableness – obstruction of justice (Kelly):
   • The court upheld a § 3C1.1 two-level obstruction enhancement based on the district court’s finding that Kelly committed perjury at trial—especially her testimony that Ruby E. Bailey Family Service Center (“Ruby Bailey”) had $378,000 in 2019 revenue.
   • The district court made the required findings on falsity, materiality, and willful intent to lie.
4. Procedural reasonableness – sophisticated means (Kelly):
   • The court upheld a § 2B1.1(b)(10)(C) two-level enhancement, finding that the totality of Kelly’s conduct—creating multiple sham entities, post-hoc tax returns, email addresses, and bank accounts, and using substantial cash withdrawals—constituted “sophisticated means.”
5. Substantive reasonableness (both defendants):
   • Both sentences were within their respective Guidelines ranges and were therefore presumed substantively reasonable.
   • The panel held that neither defendant rebutted this presumption. The district court properly weighed their lack of criminal history and community contributions against the seriousness of the fraud, lack of remorse, and the need for deterrence.

In short, the Sixth Circuit affirmed the convictions and sentences, and left any ineffective-assistance litigation to collateral review.

III. Factual and Procedural Background

A. The EIDL Program and the Fraud Scheme

The EIDL program, administered by the Small Business Administration (“SBA”), was designed to provide quickly disbursed loans and advance grants to struggling businesses during the COVID-19 pandemic. Applicants submitted online forms with information such as:

• Business identity and type;
• Gross revenues;
• Number of employees; and
• Industry sector (e.g., agricultural, faith-based, etc.).

Because of the emergency, the SBA did not independently verify each application’s representations before disbursing funds. That relaxed oversight forms part of the factual backdrop but, as the panel emphasizes, does not negate materiality or intent.

Between May 5, 2020 and July 25, 2020, Kelly and Neal submitted multiple applications for purported entities:

• Kelly’s entities:
  • Ruby E. Bailey Family Service Center, Inc. (“Ruby Bailey”);
  • Turtle Doves LLC (“Turtle Doves”);
  • North Side Market.
• Neal’s entities:
  • Grace Christian Fellowship Church (“Grace Christian”);
  • American Workhorse LLC (“American Workhorse”).

The court notes a key feature of the scheme: the Harrises submitted repeated applications for the same entities, varying key metrics (revenues, employees, and particularly industry sector) until an application was approved. Initial applications for Ruby Bailey and Grace Christian were rejected when categorized as “faith-based,” but later approved when re-labeled as “agricultural”—the only category then eligible.

Ultimately, the SBA approved:

• $102,200 for Turtle Doves;
• $152,900 for Ruby Bailey; and
• $99,200 for Grace Christian;

for an aggregate EIDL payout of $357,300 (plus a $3,000 advance to American Workhorse). Funds were deposited into joint accounts at Central Bank.

Central Bank noticed unusually large cash withdrawals and notified federal authorities. The bank eventually returned $186,503.37 in unspent funds, leaving roughly half of the disbursed money withdrawn and unrecouped.

B. Indictment, Trial, and Jury Verdict

A grand jury indicted the Harrises on twelve wire-fraud counts under 18 U.S.C. § 1343, focused on:

• False application submissions (e.g., inflated revenue and employee numbers, false business types and addresses); and
• Receipts of funds obtained by those fraudulent applications.

At trial, the government introduced:

• Tax and unemployment records showing no employees for any of the funded entities;
• Evidence that Kelly reported no income in 2019, and Neal only ~$31,628 in business revenue (from a different barbeque venture);
• Proof that the purported business locations did not house functioning enterprises (e.g., one address was a closed Pizza Hut);
• Evidence that the business bank accounts had no activity other than EIDL deposits, followed by substantial personal-use cash withdrawals and payments (including Neal’s personal bankruptcy attorney); and
• Documents and testimony showing that Kelly created email addresses, accounts, and tax forms for these entities only after, or contemporaneous with, the EIDL applications, including post-hoc 2019 tax returns to mirror the numbers she had given SBA.

Kelly and Neal both testified, claiming good faith and mistake:

• Kelly asserted that any false statements were misunderstandings of confusing questions (e.g., “lost rents”) or inadvertent errors made while applying on a small phone screen; she also claimed she counted children and informal helpers as “employees.”
• Neal largely blamed Kelly, saying he acted at her direction and did not know the details of the fraud.

The jury rejected these defenses and convicted both defendants on all counts.

C. Sentencing

At sentencing, the district court applied two enhancements to Kelly:

• Obstruction of justice (+2) under U.S.S.G. § 3C1.1, based on perjury at trial; and
• Sophisticated means (+2) under § 2B1.1(b)(10)(C), based on the nature and execution of the fraud scheme.

This yielded:

• Kelly: Guidelines range of 46–57 months; sentence of 46 months.
• Neal: Guidelines range of 37–46 months; sentence of 37 months.

Both appealed; Kelly also raised ineffective assistance on direct appeal.

IV. Detailed Analysis of the Court’s Reasoning

A. Sufficiency of the Evidence for Wire Fraud

1. Governing standard

The panel follows familiar sufficiency standards:

• Review is de novo, but highly deferential to the jury’s verdict (Emmons, Musacchio).
• The question: whether any rational trier of fact, viewing evidence in the light most favorable to the government, could find guilt beyond a reasonable doubt.
• The appellate court:
  • Leaves credibility determinations to the jury; and
  • Will reverse only if the verdict lacks “substantial and competent evidence” and is supported by no more than a “scintilla” (Vichitvongsa, Grubbs).
• Circumstantial evidence alone may suffice and need not exclude every innocent hypothesis (LaVictor).

To prove wire fraud under 18 U.S.C. § 1343, the government must show (Daniel):

1. A scheme or artifice to defraud;
2. Use of interstate wire communications in furtherance of that scheme; and
3. Specific intent to deprive a victim of money or property.

The Harrises conceded the wire element and challenged only the scheme and intent elements.

2. Scheme to defraud and materiality

A “scheme to defraud” encompasses any plan to obtain money by deception through false representations. The panel, following Daniel and Robinson, focuses on:

• Falsity: whether the defendant said something materially false; and
• Materiality: whether the misrepresentation could influence a person of ordinary prudence and comprehension.

The opinion treats the SBA’s reliance on applicant-provided revenue and employee data as central: those figures drove the loan-calculation formula, and thus their falsification was plainly material. The fact that SBA did not rigorously verify applications does not defeat materiality; what matters is the tendency or capability to influence the decision-maker, not actual careful scrutiny.

3. Application to Kelly

The panel concludes there was ample evidence that Kelly:

• Inflated or fabricated:
  • Dates of establishment;
  • Gross receipts;
  • Lost rents; and
  • Number of employees for Turtle Doves, North Side Market, and Ruby Bailey;
• Re-characterized entities as “agricultural” to qualify for EIDL; and
• Obtained funds that flowed exclusively from EIDL proceeds into freshly created business accounts.

Key circumstantial indicators of fraud include:

• No prior business income reported for Kelly in 2019, despite alleged six-figure revenues;
• No corroboration of employees in tax or unemployment records;
• No active business operations at the listed addresses; and
• Post-hoc tax returns for Ruby Bailey (and a draft return for Turtle Doves) that simply echoed the already-submitted SBA figures, created only after the bank froze and returned the funds.

The court underscores that, contrary to Kelly’s argument, EIDL applications were not rubber-stamped. The SBA initially denied some of her applications, then approved them only after she changed critical fields (notably the industry sector). That pattern itself supported an inference of deliberate tailoring, not innocent mistake.

Kelly’s “good faith mistake” narrative—confusion over “lost rents,” difficulty reading forms on a phone, misunderstandings about who counts as an employee—was for the jury to accept or reject. The appellate court stresses that the evidence need not negate every innocent explanation (Gonzalez); substantial circumstantial evidence sufficed.

4. Application to Neal

Neal’s sufficiency challenge is weaker still. On his own applications, he claimed combined revenues of $487,017 for Grace Christian and American Workhorse, despite reporting only ~$33,628 in business revenue (from another, unrelated venture) on his 2019 return. That stark discrepancy supports a finding of falsity.

On intent, Neal:

• Opened a bank account for Grace Christian after SBA approval, suggesting the entity was not previously operating as a real business;
• Used funds for clearly personal expenses, including his personal bankruptcy attorney;
• Attempted to obtain cashier’s checks from the Grace Christian account payable to himself; and
• Was a joint owner of the Ruby Bailey and Turtle Doves accounts and personally withdrew funds.

Although Neal claimed he was following Kelly’s instructions without knowledge of the fraud, the panel notes that it is not its role to choose among competing inferences where the evidence is “more than a scintilla” and “competent” (Grubbs). The jury was entitled to infer knowing participation from his direct benefit, control of the accounts, and the implausibility of his ignorance given the magnitude of the misrepresentations.

B. Ineffective Assistance of Counsel on Direct Appeal (Kelly)

Kelly alleged that her trial counsel:

• Repeatedly used the word “fraudster”;
• Failed to object to certain evidence or introduce other evidence; and
• Had hearing problems that interfered with representation.

The panel, following long-standing Sixth Circuit practice (Zheng, Lopez‑Medina, Hynes) and Supreme Court guidance (Massaro), declines to entertain ineffective-assistance claims on direct appeal unless the record is sufficiently developed to assess counsel’s performance and any prejudice.

Here, the record showed what counsel did and did not do, but not why—no explanation of strategic reasoning or the true extent of counsel’s hearing limitations. That omission is exactly why § 2255 proceedings exist: to allow factual development through affidavits, evidentiary hearings, and testimony from counsel. Thus, the court leaves any Strickland claim for collateral review.

C. Procedural Reasonableness: Obstruction-of-Justice Enhancement (§ 3C1.1)

1. Legal framework

The court reviews:

• Factual findings and application of the enhancement for clear error (Jackson); and
• Underlying legal conclusions de novo.

Section 3C1.1 mandates a two-level increase where:

“the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice” in the investigation, prosecution, or sentencing of the offense, including “the commission of perjury.”

Per Maliszewski and Castro, the district court must:

1. Identify the specific portions of testimony deemed perjurious; and

2. Make findings satisfying each element of perjury:
   • False testimony;
   • On a material matter; and
   • Given willfully, not due to confusion, mistake, or faulty memory.

2. The district court’s perjury findings

The district court identified at least four instances where Kelly lied under oath, including:

• Testifying that Ruby Bailey had $378,000 in 2019 revenue and that a tax return reflected that figure;
• Claiming Turtle Doves was operating at 800 Main Street;
• Stating that she paid rent on the Turtle Doves property; and
• Testifying that Ruby Bailey had three employees.

The appellate court focuses on the Ruby Bailey revenue testimony, noting that even one proven instance of perjury suffices for § 3C1.1.

• Falsity: The jury had already found in Count 5 that Kelly “falsely claim[ed] [Ruby Bailey] had gross receipts of $378,000.” Her reiteration of that figure at trial was therefore false.
• Materiality: The revenue figure directly affected the calculation of the EIDL loan amount, making it plainly material.
• Willfulness: The same jury verdict establishing fraudulent intent to misrepresent Ruby Bailey’s income supports a finding that repeating that number at trial was intentional, not a mere slip or confusion.

Kelly argued that any misstatements stemmed from confusion or a misunderstanding of SBA terminology (especially regarding employees and volunteers). The panel finds that argument unpersuasive as to the very specific $378,000 figure, which:

• Appeared identically in the EIDL application;
• Was later mirrored in a backdated 2019 tax return; and
• Was repeated under oath at trial.

That repetition over time undermines any suggestion of innocent mistake. The district court also took care, on the record, not to “penalize the defendant for the decision to take the stand,” but instead to isolate particular lies and analyze them under the perjury standard. The Sixth Circuit found no clear error in this methodical approach.

D. Procedural Reasonableness: “Sophisticated Means” Enhancement (§ 2B1.1(b)(10)(C))

1. Legal framework

The sophisticated-means enhancement applies where:

“the offense . . . involved sophisticated means and the defendant intentionally engaged in or caused the conduct constituting sophisticated means.” (U.S.S.G. § 2B1.1(b)(10)(C))

The commentary defines “sophisticated means” as:

“especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense,”

including, by way of example, hiding assets through fictitious entities or layered accounts.

The Sixth Circuit emphasizes (citing Chappelle) that courts should assess the totality of the conduct rather than isolating each step in the scheme. Tandon likewise supports the idea that acts that are simple in isolation may collectively amount to sophisticated means.

2. Application to Kelly’s conduct

The panel notes several features of Kelly’s scheme:

• Creation and use of multiple entities (Ruby Bailey, Turtle Doves, North Side Market) as vehicles for fraud;
• Repeated applications, adjusting key data points (revenues, employees, industry type) until the SBA approved;
• Post-hoc creation of:
  • Email addresses;
  • Business bank accounts; and
  • Tax documents (including a 2019 Ruby Bailey return matching the fraudulent figures);
• Large cash withdrawals and transfers, reducing traceability and complicating detection; and
• A pattern of essentially duplicative conduct across multiple purported businesses.

The court analogizes this pattern to earlier cases:

• Montgomery: false financial statements used to substantiate fraudulent claims;
• Middleton: reliance on cash and non-traceable instruments as hallmarks of sophisticated concealment;
• Vysniauskas: repeated use of false identities and repetitive conduct in an extensive scheme supporting the enhancement.

Kelly argued that she was not a “sophisticated business person,” did not use aliases or offshore accounts, and even contacted law enforcement herself once funds were returned. The panel responds that:

• The defendant’s personal sophistication is not the touchstone; the scheme’s complexity is;
• Offshore accounts are only one possible example of sophisticated means, not a prerequisite; and
• Considering the totality of the conduct—multiple synchronized entities, manipulated applications, and post-hoc documentation—the district court did not err in finding sophistication.

E. Substantive Reasonableness of the Sentences

1. General framework

Substantive reasonableness is reviewed for abuse of discretion (Gall), focusing on whether a sentence is “greater than necessary” to satisfy the purposes in 18 U.S.C. § 3553(a) (Tristan‑Madrigal).

Key points:

• The defendant bears the burden of showing unreasonableness (Woodard).
• Within-Guidelines sentences are presumed substantively reasonable (Vonner), and can be set aside only if, for example, the district court:
  • Ignored pertinent § 3553(a) factors;
  • Chose a sentence arbitrarily; or
  • Gave unreasonable weight to one factor (Xu).
• Appellate courts do not reweigh factors; complaints that the trial court should have balanced them differently are generally “beyond the scope” of appellate review (Rayyan, Frei).

2. Kelly’s sentence

The district court:

• Calculated a correct Guidelines range (46–57 months) including the challenged enhancements;
• Noted mitigating considerations:
  • Her lack of prior criminal record; and
  • Her history of community service;
• Balanced those against aggravating factors:
  • Seriousness of abusing pandemic relief funds;
  • Lack of acceptance of responsibility and absence of remorse (“no responsibility acceptance, no remorse, blaming others or flat denial”); and
  • Obstruction through perjury and use of sophisticated means;
• Consulted JSIN sentencing data for similarly situated wire-fraud offenders, reinforcing that the chosen sentence was not an outlier.

Kelly argued that her minimal criminal history and community work were undervalued, and that the court overemphasized loss amount. The panel characterizes this as a disagreement with the district court’s balancing—not a demonstration of arbitrariness or neglect of statutory factors. Given the within-Guidelines term and the reasoned explanation, the presumption of reasonableness stands unrebutted.

3. Neal’s sentence

The district court similarly:

• Recognized Neal’s clean record and positive character evidence;
• Credited his community contributions; but
• Stressed the seriousness of his participation in the scheme and the need to deter similar fraudulent exploitation of government assistance.

Neal argued that:

• The court minimized his mitigating factors; and
• “Conflated” his culpability with Kelly’s, describing them as having “pretty much equivalent culpability.”

The panel notes that:

• The “equivalent culpability” assessment was based on the record (shared accounts, withdrawals, and direct misrepresentations on his own applications); and
• As with Kelly, Neal’s arguments amounted to a quarrel with the district court’s weighing of § 3553(a) considerations, not a showing that the court ignored or irrationally applied them.

Accordingly, Neal’s within-Guidelines 37-month term is also upheld as substantively reasonable.

V. Precedents Cited and Their Influence

A. Sufficiency-of-the-Evidence and Wire-Fraud Framework

• Musacchio v. United States, 577 U.S. 237 (2016): Provides the canonical statement of the sufficiency standard—“any rational trier of fact”—and the requirement to view evidence in the light most favorable to the prosecution.
• United States v. Emmons, 8 F.4th 454 (6th Cir. 2021): Cited for the heavy burden on defendants challenging sufficiency and the de novo standard of review.
• United States v. Vichitvongsa, 819 F.3d 260 (6th Cir. 2016) & United States v. Grubbs, 506 F.3d 434 (6th Cir. 2007): Provide the “substantial and competent evidence” / “more than a scintilla” language, underscoring the deferential nature of sufficiency review.
• United States v. LaVictor, 848 F.3d 428 (6th Cir. 2017): Reiterates that circumstantial evidence alone can sustain a conviction.
• United States v. Daniel, 329 F.3d 480 (6th Cir. 2003): Supplies the elements of wire fraud and articulates the “scheme to defraud” and specific intent requirements.
• United States v. Robinson, 99 F.4th 344 (6th Cir. 2024): Cited for the materiality standard: whether the misrepresentation could influence a person of ordinary prudence and comprehension.
• United States v. Davis, 490 F.3d 541 (6th Cir. 2007): Provides authority that intent to defraud may be proven through circumstantial evidence.
• United States v. Gonzalez, 512 F.3d 285 (6th Cir. 2008): Clarifies that the government need not disprove every innocent explanation; it is enough that the evidence supports guilt beyond a reasonable doubt.

Collectively, these cases frame the court’s insistence that the Harrises’ alternative narratives (confusion, lack of sophistication, following a spouse’s lead) did not compel acquittal where circumstantial evidence of deception and benefit was substantial.

B. Ineffective Assistance on Direct Appeal

• United States v. Zheng, 27 F.4th 1239 (6th Cir. 2022); United States v. Lopez‑Medina, 461 F.3d 724 (6th Cir. 2006); United States v. Hynes, 467 F.3d 951 (6th Cir. 2006): These decisions establish the Sixth Circuit’s routine practice of reserving ineffective-assistance claims for § 2255 unless the record is already fully developed.
• Massaro v. United States, 538 U.S. 500 (2003): The Supreme Court endorsed this approach, noting that direct appeals often reveal only the fact of counsel’s decisions, not the strategic reasons behind them.

The Harris panel faithfully applies this body of law, refusing to adjudicate claims about counsel’s alleged incompetence or hearing limitations without a proper factual record.

C. Obstruction of Justice and Perjury

• United States v. Maliszewski, 161 F.3d 992 (6th Cir. 1998): Recognizes that perjury is encompassed within § 3C1.1 obstruction.
• United States v. Castro, 960 F.3d 857 (6th Cir. 2020): Requires district courts to:
  • Identify specific perjured statements; and
  • Make findings covering falsity, materiality, and willful intent.
• United States v. Jackson, 154 F.4th 422 (6th Cir. 2025): (post-dating the knowledge cutoff but described in the opinion) cited for the standard of review—clear error for factual findings and application of a perjury-based obstruction enhancement.

The panel highlights that the district court followed Castro’s blueprint, thus creating a model for future sentencing judges seeking to insulate § 3C1.1 enhancements from reversal.

D. Sophisticated-Means Enhancement

• United States v. Chappelle, 78 F.4th 854 (6th Cir. 2023): Emphasizes viewing the totality of the conduct, not atomized steps, in deciding whether an offense involved sophisticated means.
• United States v. Montgomery, 592 F. App’x 411 (6th Cir. 2014): Shows that fabricating documentation (e.g., profit-and-loss statements) to support fraudulent claims can be sophisticated.
• United States v. Middleton, 246 F.3d 825 (6th Cir. 2001): Cites use of cash and non-traceable instruments as evidence of sophistication.
• United States v. Vysniauskas, 593 F. App’x 518 (6th Cir. 2015): Holds that repeated use of false identities in an extensive repetitive scheme supports the enhancement, even if each act is not inherently complex.
• United States v. Tandon, 111 F.3d 482 (6th Cir. 1997): Reinforces that otherwise simple acts may collectively be sophisticated.
• United States v. Rupp, 2023 WL 370908 (6th Cir. Jan. 24, 2023): Noted here for the unresolved question whether application of the enhancement is reviewed de novo or for clear error; the Harris panel declines to resolve that question because the enhancement is proper under either standard.

In Harris, these authorities are used to show that creating and using multiple sham entities, falsifying documentation, and using cash to obscure transactions can together justify a sophisticated-means enhancement, even absent classic hallmarks like offshore accounts.

E. Procedural & Substantive Reasonableness of Sentences

• Gall v. United States, 552 U.S. 38 (2007): Provides the framework for procedural and substantive reasonableness review and the abuse-of-discretion standard.
• United States v. Tristan‑Madrigal, 601 F.3d 629 (6th Cir. 2010); United States v. Simmons, 501 F.3d 620 (6th Cir. 2007): Emphasize that sentences must not be “greater than necessary” and must reflect § 3553(a)’s goals.
• United States v. Vonner, 516 F.3d 382 (6th Cir. 2008) (en banc): Establishes the presumption of reasonableness for within-Guidelines sentences.
• United States v. Woodard, 638 F.3d 506 (6th Cir. 2011): Places the burden of proving substantive unreasonableness on the defendant.
• United States v. Rayyan, 885 F.3d 436 (6th Cir. 2018): Explains that appellate courts do not micro-manage how sentencing judges balance different § 3553(a) factors.
• United States v. Frei, 995 F.3d 561 (6th Cir. 2021): Holds that disagreement with the district court’s weighing of factors does not, by itself, establish substantive unreasonableness.
• United States v. Xu, 114 F.4th 829 (6th Cir. 2024): Describes circumstances under which a defendant may rebut the presumption of reasonableness (e.g., clearly ignoring relevant factors, arbitrary choice, or over-weighting a single factor).

The panel uses this line of cases to affirm relatively modest, low-end Guidelines sentences for significant pandemic-relief fraud, highlighting the deference afforded to district courts that articulate a reasoned basis for their sentencing decisions.

VI. Complex Concepts Simplified

1. “Wire fraud” under 18 U.S.C. § 1343

Wire fraud is essentially:

• A plan to cheat (scheme to defraud);
• Using electronic communications (internet, phone, bank wires);
• To obtain money or property from someone else;
• By lying or deceptive half-truths; and
• On purpose (with specific intent).

In this case, submitting false EIDL applications over the internet qualifies as using interstate wires.

2. Material misrepresentation

A false statement is “material” if it could influence the decision-maker, even if it does not actually do so. Here, revenue and employee counts were material because the SBA used them to determine loan and grant amounts.

3. “Specific intent to defraud”

Specific intent means more than negligence or mistake. The defendant must:

• Know the statement is false or misleading; and
• Intend that the victim rely on it to part with money or property.

Patterns such as repeated misrepresentations, inconsistent tax filings, and personal use of funds can be circumstantial evidence of such intent.

4. Obstruction of justice via perjury (§ 3C1.1)

Perjury at trial can increase a defendant’s Guidelines range if:

• They testify under oath;
• Make a statement that is:
  • False;
  • About something important to the case (material); and
  • Intentionally false, not just mistaken or confused.

The sentencing judge must identify the specific lies and explain why they satisfy these elements.

5. “Sophisticated means” (§ 2B1.1(b)(10)(C))

An offense involves sophisticated means when the method of committing or hiding the crime is especially elaborate or intricate. Examples include:

• Using multiple fake companies or shell corporations;
• Creating false financial documents to back up lies;
• Moving money through different accounts or using cash to obscure its trail.

The question is not whether each single act is complex, but whether the overall scheme shows a level of planning and concealment beyond simple fraud.

6. Procedural vs. substantive reasonableness in sentencing

• Procedural reasonableness focuses on how the sentence was calculated and imposed:
  • Did the court correctly compute the Guidelines?
  • Did it consider the statutory factors?
  • Did it explain its reasons?
• Substantive reasonableness asks whether the length of the sentence is reasonable in light of the offense and the defendant, given the § 3553(a) factors.

A procedurally sound, within-Guidelines sentence is usually upheld unless the defendant can show an extreme mismatch between the facts and the penalty.

VII. Impact and Implications

1. Pandemic-Relief Fraud Prosecutions

Although unpublished, Harris provides a detailed template for handling EIDL (and, by analogy, PPP and other COVID-relief) fraud:

• Materiality: Defendants cannot defeat materiality by pointing to the SBA’s expedited or lax verification practices. Revenue and employee data are central to the program’s design and therefore material as a matter of law.
• Proof of intent: Prosecutors can rely heavily on:
  • Discrepancies between SBA applications and tax/unemployment records;
  • Post-hoc creation of documents (tax returns, bank accounts, emails); and
  • Use of funds for personal expenses rather than business operations.
• Classification games (e.g., “agricultural” vs. “faith-based”): Repeatedly recategorizing entities to fit eligibility criteria strongly supports an inference of intentional deceit rather than confusion.

2. Sentencing: Perjury and Defendant Testimony

The case reinforces a significant sentencing risk: when a defendant testifies and reiterates the same lies that underlie the offense, a § 3C1.1 enhancement is likely if the court carefully documents its perjury findings. Defense counsel must therefore:

• Evaluate very carefully whether a defendant with fragile credibility should take the stand; and
• Prepare clients for cross-examination on any prior statements, including loan applications and tax returns.

At the same time, Harris also underscores that courts may not automatically penalize defendants for testifying; they must follow the Castro framework, isolating actual, proven lies.

3. Scope of “Sophisticated Means” in Fraud Cases

The decision provides persuasive authority that:

• A multi-entity scheme using sham companies, repeated applications, and post-hoc documentation can be sophisticated even if:
  • The defendant is not financially sophisticated; and
  • There are no offshore accounts, aliases, or obviously high-level maneuvers;
• Use of cash withdrawals and non-traceable transfers is a significant factor favoring the enhancement.

In pandemic-relief prosecutions, this reasoning supports more frequent application of § 2B1.1(b)(10)(C) given the prevalence of multiple fake entities and post-hoc legitimizing paperwork.

4. Limited Appellate Relief for Within-Guidelines Sentences

Harris illustrates once again that:

• Within-Guidelines sentences, especially at the low end, are strongly insulated from substantive reasonableness challenges;
• Arguments that focus only on mitigating factors (e.g., lack of record, community service) rarely suffice to overturn such a sentence; and
• Where the district court explicitly emphasizes general deterrence (here, of fraud on government relief programs), that purpose can legitimately justify a substantial term of imprisonment.

5. Ineffective-Assistance Claims and Record Building

The panel’s refusal to decide IAC on direct appeal underscores the importance of building a factual record in post-conviction proceedings. Defendants who believe trial counsel erred must:

• Pursue § 2255 motions rather than relying on direct appeal; and
• Be prepared to offer evidence (from counsel and others) regarding strategy and prejudice.

Appellate lawyers should also be realistic about the limited prospects of succeeding on IAC claims on direct review absent exceptional clarity in the trial record.

VIII. Conclusion

United States v. Kelly Harris; Neal Harris offers a thorough application of established fraud, sentencing, and appellate standards to the now-common scenario of COVID‑19 EIDL program abuse. While expressly “not recommended for publication” (and thus non-precedential under Sixth Circuit rules), it is instructive in several respects:

• It confirms that relaxed government screening during a crisis does not diminish the materiality of false statements in relief applications;
• It demonstrates how circumstantial financial and documentary evidence can sustain wire-fraud convictions even when defendants claim confusion or reliance on others;
• It shows how trial perjury tied to the same misrepresentations underlying the offense can support an obstruction-of-justice enhancement if the district court makes the required findings;
• It broadens, in a practical sense, the use of the sophisticated-means enhancement in pandemic-relief fraud cases; and
• It reinforces the entrenched presumption of reasonableness for within-Guidelines sentences and the narrow scope of appellate review over district courts’ balancing of § 3553(a) factors.

As COVID‑era fraud prosecutions continue and gradually transition into more routine financial crime dockets, Harris stands as a useful, if nonbinding, example of how the Sixth Circuit expects trial courts to handle evidence, enhancements, and sentencing in this context.