CHRISTIANSTED — A 31-year-old man from St. Thomas appeared in federal court on Thursday to face multiple felony charges after investigators alleged he fraudulently obtained and spent over $400,000 in pandemic-era relief funds.
United States Attorney Adam F. Sleeper announced that David J. McDonald appeared before U.S. District Court Magistrate Judge Emile A. Henderson III on January 15, 2026. McDonald faces a string of serious charges, including:
- Bank Fraud
- Wire Fraud
- Money Laundering
- Making False Statements
The Allegations
The charges are tied to the Paycheck Protection Program (PPP), a component of the 2020 CARES Act designed to help small businesses keep workers on their payroll during the COVID-19 pandemic.
According to court documents, between 2020 and 2021, McDonald submitted fraudulent loan applications to several banks on behalf of two entities: Ocean Breeze, LLC and DEMS Holdings, LLC. In these applications, McDonald reportedly certified that the funds would be used to pay employees of the businesses.
“No Employees” and Personal Spending
Federal investigators revealed a different story. The investigation allegedly found that:
- Neither Ocean Breeze, LLC nor DEMS Holdings, LLC had any employees.
- The $400,000 in loan proceeds were diverted for personal expenses and wire transfers to unrelated individuals.
- McDonald successfully applied for and received full loan forgiveness from the Small Business Administration (SBA).
Authorities state that over the course of approximately five years, McDonald exhausted the entirety of the fraudulently obtained funds.
Multi-Agency Investigation
The case is being spearheaded by a coalition of federal agencies, including the U.S. Postal Inspection Service, Homeland Security Investigations (HSI), and the SBA Office of the Inspector General. The prosecution is being led by Assistant U.S. Attorney Natasha Baker.
As with all criminal cases, an indictment is merely an allegation. McDonald is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
