A Morgantown, West Virginia restaurant owner has pleaded guilty to defrauding federal pandemic relief programs, part of a nationwide crackdown that swept up more than 160 defendants across the country. His name is Kurt Ly, and he’s 69. He owns and operates Vin Phat, Inc., a business in Morgantown.
The U.S. Attorney’s Office for the Northern District of West Virginia announced the plea on September 15, 2026, as part of a coordinated enforcement action led by the Justice Department’s National Fraud Enforcement Division, the Small Business Administration, and the SBA Office of Inspector General.
What He Admitted To
Ly admitted to a scheme to defraud federal pandemic relief programs designed to support small businesses during the COVID-19 crisis. According to investigators, Ly obtained Paycheck Protection Program loans, then used the money for expenses that weren’t permitted under the program’s rules. Afterward, he falsely certified to the SBA that the funds had been used properly in order to get the loans forgiven.
The Disaster Loan Piece
There’s a second piece to the case too. Authorities say Ly also received a $146,600 Economic Injury Disaster Loan in August 2020, certifying at the time that the money would go toward working capital for Vin Phat.
Instead, investigators determined that portions of that money went toward personal expenses. Those reportedly included a $15,000 vehicle payment, cryptocurrency investments, and transfers to his personal accounts, none of which fits the working-capital purpose he certified when he applied for the loan.
Part of a Massive Nationwide Sweep
Ly’s case wasn’t handled in isolation. It came out of a surge takedown effort that ran from June 12 to September 1, 2026, involving federal prosecutors across the country. Altogether, the sweep covered more than 160 criminal defendants, including around 80 newly charged individuals, and totaled approximately $245 million in intended losses to American taxpayers.
The effort has a name too, Operation No Doze. SBA Inspector General William Kirk described it as a focused, coordinated approach to pursuing fraud in the SBA’s pandemic relief programs, adding that the passage of time doesn’t diminish accountability for people who exploited programs meant to help small businesses during a genuinely difficult period.
Another Morgantown Case in the Same Sweep
Ly’s plea came alongside a separate, unrelated case involving another Morgantown business owner, James Baldwin II, 46, owner of Select Decks. Baldwin was sentenced to 30 days in federal prison and ordered to pay $1,007,223 in restitution after falsifying documents to obtain $738,230 in PPP loans across Select Decks and three other businesses that weren’t actually operating before the pandemic. He also failed to pay $258,993 in payroll taxes he’d withheld from employees but never sent to the IRS.
The two cases are separate from each other, but both were announced together as part of the same broader federal takedown targeting West Virginia.
Where the Case Stands
Since Ly has already pleaded guilty, his case now moves toward sentencing. A federal judge will determine the specific penalty based on the details of the plea agreement and the scope of the fraud involved. Given how the case against Baldwin played out in the same announcement, restitution to the government is a likely component of whatever sentence Ly ultimately receives.