Restaurateur Michael Felts sentenced to prison in PPP fraud case

Last edited 2:21 p.m., Dec. 17, 2024 [Editor's note: A statement from Michael Felts' attorney has been added.]

Springfield restaurateur Michael Felts has been sentenced to prison and ordered to pay restitution in a Paycheck Protection Program fraud scheme case prosecuted by the federal government.

Felts, who pleaded guilty in July 2023 to participating in a wire fraud conspiracy, was sentenced today by Judge Stephen R. Bough in the U.S. District Court for the Western District of Missouri Southern Division. Felts was ordered by Bough to spend 24 months in prison and pay nearly $8.2 million in restitution. Felts also is subject to three years of supervised release after completing his prison term.

In his guilty plea last year, Felts admitted to participating in a wire fraud conspiracy that fraudulently obtained or attempted to obtain nearly $14 million between January 2018 and September 2022 through commercial loans, PPP loans and Economic Injury Disaster loans and grants through federal coronavirus relief packages, according to past reporting. After PPP fraud allegations by the federal government were brought to light in 2022, Felts' Taco Habitat, Hot Cluckers and Bourbon & Beale restaurants in Springfield closed.

The McGull Law Firm LLC owner Abe McGull, who represented Felts along with James Hobbs of Kansas City-based Wyrsch, Hobbs & Mirakian PC, at today's sentencing hearing sought to bring attention to alleged crimes by Felts' co-conspirator in the case, who he identified as Craig Davis. McGull alleged Davis, who he said is scheduled to be sentenced in January in Virginia, was the mastermind of the fraud scheme.

"He got sucked in. His only flaw was he trusted the wrong man," McGull said of Felts. "We have the mule. We don't have the kingpin."

Speaking at the hearing, Felts said he had attempted to collect evidence to expose Davis when he discovered what he called illegal activity.

"I'm not a career criminal. I'm not a mastermind," Felts said between tears. "I'm not trying to run. I'm not trying to hide. I've been scared for three years."

Assistant U.S. Attorney Casey Clark said at the hearing that Felts took advantage of the COVID-19 pandemic and federal stimulus funds "to line his own pockets." The federal government has alleged in the case that Felts used the proceeds of fraudulently obtained stimulus funds for personal expenses such as real estate, vehicles and a yacht, rather than their intended purpose of assisting businesses negatively impacted by the pandemic. In his guilty plea last year, Felts agreed not to contest the federal government's forfeiture of personal property and real estate purchased with the proceeds of the wire fraud conspiracy.

"It's important for us to all to remember what life was like back then," Clark said today, referencing loans taken out by Felts during key points in the pandemic. "His crimes will not be forgotten by this community."

Before issuing the sentence, Bough said that while he doesn't believe Felts is the worst person involved in the case, his lavish lifestyle detailed by the federal government was a point of contention.

"That concerns me," he said. "At some point, you knew what was going on stunk to high heaven.

"If you lie down with dogs, you wake up with fleas."

Bough ordered Felts to self-report to prison on Feb. 28. The judge said Felts would have 14 days to file a notice of appeal.

McGull provided a statement to Springfield Business Journal after the sentencing.

"Today’s federal sentence of Michael Felts reflects the court’s consideration of Felts’ acceptance of responsibility and cooperation with other jurisdictions in bringing Craig Davis, owner and manager of Bright Vanguard LLC, to justice," the statement reads. "According to federal court documents, Davis has pleaded guilty in the Eastern District of Virginia for conspiring and causing more than $60 million of fraudulently induced lending from at least 15 different lenders across 359 separate loans."