Carmine G. Agnello, grandson of the late Gambino crime boss John Gotti, has been sentenced to 15 months in prison for defrauding a COVID-19 relief program of roughly $1.1 million. Prosecutors stated he diverted approximately $420,000 of the stolen funds into a cryptocurrency business instead of using the money for legitimate business expenses as required.
Carmine G. Agnello has been sentenced to 15 months in federal prison for defrauding the Small Business Administration’s Economic Injury Disaster Loan program. He was also ordered to repay $1.27 million, serve supervised release, and complete community service.
Prosecutors from the U.S. Attorney’s Office for the Eastern District of New York stated that Agnello submitted false loan applications for his business, Crown Auto Parts & Recycling, LLC. He overstated employee numbers and misrepresented how the funds would be used.
He pleaded guilty to wire fraud in September 2024 after obtaining about $1.1 million. Authorities said he diverted roughly $420,000 of that sum into a cryptocurrency business.
The SBA’s Office of Inspector General has estimated that over $200 billion in potentially fraudulent loans were disbursed through COVID relief programs. Around $136 billion was tied to the EIDL program alone.
Experts said the case reflects structural vulnerabilities in the emergency relief design. Cybercrime consultant David Sehyeon Baek said, “The government prioritized speed, relaxed controls, and created what investigators have described as a kind of pay-now-chase-later environment.”
TRM Labs Head of Policy, EMEA, Isabella Chase, called pandemic programs significant fraud vectors. “The combination of unprecedented speed of disbursement, relaxed verification requirements, and the rapid maturation of crypto markets created a near-perfect storm,” Chase stated.
Other similar cases have emerged, including a Los Angeles rideshare driver charged with using fraudulent loan proceeds for crypto. In a separate case, a rural English glazier was sentenced for directing COVID loans toward crypto and gambling.
Agnello’s attorney cited a gambling addiction and an unusual upbringing as contributing factors. There were no allegations of broader organized crime involvement in this specific fraud case.
