Carmine G. Agnello, grandson of infamous crime boss John Gotti, has been sentenced to 15 months in prison for misusing pandemic relief funds by investing them in cryptocurrency. This case highlights a trend of opportunistic fraud during the distribution of COVID-era aid, experts suggest.
According to the U.S. Attorney’s Office for the Eastern District of New York, Agnello defrauded the Small Business Administration (SBA) of approximately $1.1 million through the Economic Injury Disaster Loan (EIDL) program. Roughly $420,000 of these funds were diverted into a crypto business rather than supporting his actual company needs.
In September 2024, Agnello pleaded guilty to wire fraud and was ordered to pay $1,268,302 in restitution, undergo two years of supervised release, and complete 100 hours of community service. From April 2020 to November 2021, he submitted fraudulent applications for at least three EIDLs on behalf of his Jamaica, Queens-based business, Crown Auto Parts & Recycling, LLC, providing false information about employee numbers and fund usage.
The SBA’s Office of Inspector General estimates that over $200 billion in potentially fraudulent loans were issued through COVID relief programs, with around $136 billion linked to EIDL. Cybercrime consultant David Sehyeon Baek pointed out structural weaknesses in emergency aid design, noting the government’s prioritization of speed and relaxed controls led to a ‘pay-now-chase-later’ situation.
Isabella Chase from TRM Labs described these pandemic programs as significant fraud vectors, attributing this to weak verification processes that facilitated the crypto pivot. “The combination of rapid disbursement, lax verification, and swift evolution of crypto markets created an ideal scenario for fraud,” Chase stated in an interview with Decrypt.
Earlier in the month, Bruce Choi, a Los Angeles rideshare driver, was charged by federal prosecutors with wire fraud and money laundering after allegedly securing over $2 million in COVID loans for a non-existent company and transferring funds to the crypto exchange Kraken. Additionally, a rural English glazier was sentenced last October to 22 months for misusing two COVID Bounce Back loans intended for business recovery; he redirected some funds into cryptocurrency and gambling, despite being eligible for only one loan.
John Gotti, Agnello’s grandfather, became infamous as the head of the Gambino crime family in the 1980s before his conviction on murder and racketeering charges in 1992. While Agnello’s familial ties are notable, Baek remarked that the Department of Justice (DOJ) approached this case as a straightforward wire-fraud matter. The absence of RICO or money laundering charges suggests no broader organized crime involvement, which is unusual given the Eastern District’s experience with Gambino-related cases.
During sentencing, Agnello’s attorney, Jeffrey Lichtman, argued that his client’s gambling addiction and unique upbringing—including exposure from the reality show “Growing Up Gotti”—played a role in his actions. This defense is uncommon; typically, crypto fraud cases exhibit deliberate and calculated behavior, such as structured transactions and efforts to disguise fund origins, according to Chase.