East Granby Woman Who Stole in $1.1 Million Pandemic Relief Program Scheme is Sentenced
A Connecticut woman who exploited pandemic relief programs meant to keep small businesses afloat has been sentenced for orchestrating a scheme that netted her more than $1.1 million in fraudulent loans. Karen Gaston, 45, of East Granby, received three years of probation from U.S. District Judge Sarah F. Russell in New Haven, along with four weekends of incarceration, 10 months of home detention and 500 hours of community service.
The case reaches back to the early months of the pandemic, when Congress passed the CARES Act in March 2020 to provide emergency financial support to Americans and businesses struggling under the economic shutdown. The law created the widely used Paycheck Protection Program, which offered forgivable loans to small businesses to cover payroll and essential expenses. It also expanded access to Economic Injury Disaster Loans, another federal program administered by the Small Business Administration to help small businesses address operational costs during the crisis. Both relied on truthful reporting from applicants to ensure funds went to legitimate business needs.
According to court records, Gaston controlled several entities during 2020, including LNK, Elegant Clinical, Ruby Red LLC and Diamond Shine LLC. While some of these businesses were technically operational, they shared resources and employees, and others were barely functioning or defunct. Despite this, beginning in April 2020, she filed a series of PPP and EIDL loan applications claiming that each business was an active, fully staffed operation. Prosecutors say she doubled down on the deception by submitting applications to multiple financial institutions to mask the pattern of fraud. Her filings included fabricated employee numbers, inflated wage claims, falsified tax returns and even the misuse of a family member’s identity to present them as a business owner. Notably, at least one fraudulent loan application was filed after she had already been arrested on unrelated state Medicaid fraud charges.
Through these false submissions, Gaston secured $1,163,910 in federal relief funds. Rather than using the money to support payroll or business expenses as required, she spent it on personal luxuries—cars, travel, fine dining, designer home goods, high-end jewelry and paying down her own mortgage. Among the items later forfeited was a Harry Winston ring priced at $39,521.63, purchased in July 2020 at the height of the scheme.
Gaston pleaded guilty on June 12, 2025, to wire fraud and making illegal monetary transactions. In addition to probation and home confinement, she has been ordered to pay full restitution for the losses. The investigation was conducted by the IRS Criminal Investigation Division, and the case was prosecuted by Assistant U.S. Attorney Michael S. McGarry.
The sentencing highlights the long-term consequences for those who exploited COVID relief programs, underscoring federal efforts to pursue fraud that siphoned funds away from businesses that genuinely needed support during the pandemic.
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