Investigators say a second defendant was arrested in South Carolina and will be brought to Atlanta.
ATLANTA, GA — Federal agents arrested an Atlanta man this week after prosecutors accused him of stealing nearly $1.5 million in COVID-19 relief money meant to help small businesses survive pandemic shutdowns. The suspect, Clyde Chavo, appeared in federal court and pleaded not guilty, authorities said.
The case adds to a long-running federal push to track down fraud tied to pandemic aid programs that moved money quickly, often with limited checks at the start. Investigators say Chavo and another man, Theodore Jackson, built a web of fake companies, forged financial records and used stolen identities to obtain government-backed funds. Prosecutors say the money was then shifted across multiple bank accounts, leading to wire fraud and money laundering charges.
Neighbors in Atlanta’s Hunter Hills neighborhood told a local TV station they saw investigators arrive before sunrise on Wednesday, with blue lights flashing as agents pulled up to a home. Federal Bureau of Investigation agents arrested Chavo there, according to the report. Court records cited in the report say prosecutors believe he used fraudulent Paycheck Protection Program applications that claimed businesses could not meet payroll. A federal grand jury indictment alleges the government wired him more than $400,000 on three separate dates in 2020 and an additional $125,000 in 2021. Chavo entered a not-guilty plea during his initial court appearance, and the case is now set for the next steps in federal court.
Prosecutors say Chavo did not act alone. Investigators accuse Jackson of helping steal strangers’ identities so the names and personal information could be attached to the fake businesses used in the loan applications. Authorities say the two men filled out paperwork and moved the funds across bank accounts once the money arrived. Both men face eight counts of wire fraud and two counts of money laundering, the report said. Jackson was arrested Wednesday in Charleston, South Carolina, and agents plan to transfer him to Atlanta for his first court appearance, where he is expected to enter a plea. The indictment describes a scheme built on falsified paperwork, and investigators say they are still sorting out how many identities were used and how the proceeds were spent.
The alleged fraud centers on the Paycheck Protection Program, a massive emergency lending effort launched in 2020 to keep workers paid as businesses closed or cut hours. PPP loans were issued through private lenders but backed by the federal government, and many loans could be forgiven if borrowers met program rules. The speed of the rollout helped businesses get cash fast, but it also opened the door for forged documents, fake payroll claims and identity theft, according to government watchdogs and law enforcement reports over the last several years. Federal officials have said they have charged thousands of defendants nationwide in COVID-19 relief cases and have seized or recovered billions in suspected stolen funds, while watchdog agencies have warned that losses across multiple pandemic programs likely reached into the hundreds of billions.
In the Atlanta case, prosecutors say the money trail itself is a key piece of the investigation. Money laundering charges often focus on how funds are moved after they are received, including transfers between accounts, withdrawals, and payments designed to hide the source of the money. The indictment described by the station alleges that Chavo and Jackson transferred the proceeds across bank accounts after the government wires were sent. Investigators have not publicly detailed which banks handled the transactions or whether any lenders flagged suspicious applications at the time. Those questions are likely to be explored as the case moves forward, along with whether other people helped create the businesses, prepare the paperwork, or open accounts used to receive and move the funds.
Chavo’s arrest also comes with a history that prosecutors and defense lawyers are likely to battle over in court. The station reported that Chavo was previously convicted in a 2012 tax return identity theft scheme in DeKalb County that authorities said involved the identities of at least 10,000 people. In that earlier case, police said he created fake businesses using real people’s information and filed large numbers of phony tax returns, netting hundreds of thousands of dollars, according to a prior local report. He served more than three years in prison, the station said. Defense attorneys often argue that old cases should not be used to imply guilt in new charges, while prosecutors may seek to use limited evidence of past conduct to show knowledge or intent, depending on court rulings.
In court, the next key milestones will focus on Jackson’s first appearance in Atlanta and the early schedule in the federal case against both men. At initial appearances, judges typically review charges, consider release conditions and set future dates for detention hearings, arraignments and discovery deadlines. Prosecutors will have to outline what evidence they plan to use, including bank records, application documents, and any communications tied to the alleged creation of businesses and movement of funds. Defense lawyers will be able to challenge the indictment, question how investigators identified the defendants, and argue over whether the government can prove the applications were knowingly false. No trial date was announced in the report, and it was not immediately clear whether either defendant would seek release while the case is pending.
For Hunter Hills residents, the case briefly turned a quiet morning into a law-enforcement scene, with neighbors sharing video of agents arriving in the neighborhood. The station said residents captured the moment investigators pulled up before dawn. The charges, however, reach beyond one block. Prosecutors say the scheme pulled money from a program designed to keep paychecks flowing during a national crisis, and they say the use of stolen identities added an extra layer of harm for people who may spend months or years clearing their names. The government has urged banks and businesses to report suspected fraud tied to pandemic programs, and officials have said more cases can surface years after the original payments because financial trails and identity theft reports continue to develop.
Chavo remains charged in federal court in Atlanta after pleading not guilty, and Jackson is expected to be brought to the city for his first appearance. The next major step is Jackson’s initial hearing, followed by scheduling decisions that will set the pace of the case in the weeks ahead.
Author note: Last updated February 13, 2026.