Carmine G. Agnello, grandson of mob boss John Gotti, has been sentenced to 15 months in prison for defrauding the SBA's COVID-19 EIDL program, diverting $420,000 into crypto investments. He must also repay $1.27 million and serve two years of supervised release.
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Long Island Man Sentenced to Prison for $1 Million Covid-19 Fraud
— US Attorney EDNY (@EDNYnews) April 20, 2026 Prosecutors said he diverted about $420,000 of those funds into a crypto business instead of using the money to support his company. He pleaded guilty in September 2024 to wire fraud and was also ordered to pay $1,268,302 in restitution, serve two years of supervised release, and complete 100 hours of community service. Between April 2020 and November 2021, Agnello fraudulently applied for at least three Economic Injury Disaster Loans through his Jamaica, Queens-based business, Crown Auto Parts & Recycling, LLC, submitting false information about employee headcount and intended use of funds, according to the statement. The SBA's Office of Inspector General has estimated that more than $200 billion in potentially fraudulent loans were disbursed through COVID relief programs, with around $136 billion tied to EIDL alone.
Experts told *Decrypt* that Agnello's case reflects a structural vulnerability baked into emergency relief design. "The government prioritized speed, relaxed controls, and created what investigators have described as a kind of pay-now-chase-later environment," cybercrime consultant David Sehyeon Baek said. "Money was pushed out fast, and serious verification often came much later." Isabella Chase, Head of Policy, EMEA at TRM Labs, called pandemic programs "among the most significant fraud vectors we have observed in recent years." Both experts pointed to how weak verification enabled the crypto pivot. "The combination of unprecedented speed of disbursement, relaxed verification requirements, and the rapid maturation of crypto markets created a near-perfect storm," Chase told *Decrypt*. Last month, federal prosecutors charged Los Angeles rideshare driver Bruce Choi with wire fraud and money laundering after he allegedly for a fictional company called Premier Republic and wired the proceeds to crypto exchange Kraken. In October, a rural after securing two COVID Bounce Back loans and directing a portion toward crypto investments and gambling, when only one loan was permitted.
Carmine G. Agnello was sentenced for defrauding the SBA's COVID-19 EIDL program by submitting false loan applications and diverting funds into crypto.
Agnello fraudulently obtained approximately $1.1 million from the COVID relief program.
Agnello faces 15 months in federal prison, must repay $1.27 million, serve two years of supervised release, and complete 100 hours of community service.
Agnello's family background as the grandson of John Gotti raised questions, but the DOJ treated it as a straightforward wire-fraud case without broader organized crime allegations.
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Agnello's grandfather, John Gotti, rose to lead the Gambino crime family in the 1980s, becoming one of the most notorious mob bosses in American history before his 1992 conviction on murder and racketeering charges. Baek said that while Agnello's family background naturally raises questions, the public record gives little to work with. "The DOJ appears to have treated it as a fairly straightforward wire-fraud case," he said. "In a district like the Eastern District of New York, which has a long history of handling Gambino-related prosecutions, that kind of omission usually tells you something." There were no RICO allegations, no money laundering charges, and no public suggestion of broader organized crime involvement, a significant absence, Baek noted, given the Eastern District's institutional familiarity with Gambino prosecutions. Agnello's attorney, Jeffrey Lichtman, told the court his client suffered from a gambling addiction and pointed to an unusual upbringing, including the reality show “Growing Up Gotti,” as contributing factors, according to an *NBC New York* report. Such defenses are rare in practice, with fraud cases involving crypto more often showing “deliberate, methodical behaviour,” including structured transactions, layering across wallets, and efforts to obscure the origin of funds, Chase said.