Jacksonville, FL - It's been a long legal road to this morning in the federal fraud case involving two former Democratic Jacksonville City Council Members. Jury selection is set to begin today in the case against Katrina Brown and Reggie Brown. They are not related, despite sharing a last name.
As WOKV first reported in May of 2018, the two were named in a 38-count indictment dealing with money laundering, various fraud charges and more. Prosecutors say they conspired to submit fake invoices, in order to receive payments from a federally-backed loan for Katrina Brown’s family BBQ sauce business.
The US Attorney’s Office said an unnamed relative of Katrina Brown obtained a $2.652 million loan through the Small Business Administration in 2011 for two businesses- Cowealth, LLC and Basic Products, LLC. They also were approved for a $380,000 loan and more than $210,000 grant from the City of Jacksonville, to establish a facility on Commonwealth Avenue to manufacture, bottle, and sell barbecue sauce. The business was already in operation, but sought to expand, including creating 56 full time jobs.
In late 2013, which is before Katrina Brown joined the City Council in mid-2015, she began to operate as the primary principal for those businesses.
The BBQ sauce business struggled, and was not meeting financial projections by late 2013. The indictment says, instead of notifying the lender and City and lender of the business’ state of affairs, Katrina Brown approached Reggie Brown- who was a sitting Council member at the time- about incorporating two businesses, A Plus Training and Consultants, LLC and RB Packaging, LLC.
Katrina Brown allegedly submitted fake invoices, saying those two businesses provided goods or services that were never actually delivered, in order to continue getting payments from the loan. Some of the examples in the indictment include fraudulent invoices to buy heavy machinery, labels, and other supplies, but prosecutors say the transactions didn’t actually take place. In one case, prosecutors say Katrina Brown falsified a quote for heavy machinery, to make it appear as though it was from one of the alleged shell companies
Reggie Brown was a principal in those allegedly fake businesses, and prosecutors say he managed the bank accounts. The indictment says the money drawn from these fake invoices was used for personal expenses for Reggie Brown and Katrina Brown, with some also going to the business, but under the false pretenses. The indictment further alleges Katrina Brown arranged for at least two other people to get money through the SBA loan for services or goods that were not actually provided. Some of that funding was then given by the third party to Katrina Brown, according to prosecutors.
After the indictments, their attorneys said all of the SBA loan money and hundreds of thousands of dollars from Katrina Brown’s family went to the business. Reggie Brown said he formed the companies for the “worthy goal of getting the businesses up and running”, according to the statement.