Restaurateur Michael Felts receives prison sentence in PPP fraud case

Springfield restaurateur Michael Felts has been sentenced to prison and ordered to pay restitution in a Paycheck Protection Program fraud scheme case prosecuted by the federal government.

Felts, who pleaded guilty in July 2023 to participating in a wire fraud conspiracy, was sentenced Dec. 17 by Judge Stephen R. Bough in the U.S. District Court for the Western District of Missouri Southern Division. Felts was ordered by Bough to spend 24 months in prison and pay nearly $8.2 million in restitution. Felts also is subject to three years of supervised release after completing his prison term.

Fraud scheme and co-conspirator
In his guilty plea last year, Felts admitted to participating in a wire fraud conspiracy that fraudulently obtained or attempted to obtain nearly $14 million between January 2018 and September 2022 through commercial loans, PPP loans and Economic Injury Disaster loans and grants through federal coronavirus relief packages, according to past reporting. Federal prosecutors and Felts’ attorneys agreed at the sentencing that the restitution amount of nearly $8.2 million was closer to the actual loss to the government in the scheme.

The McGull Law Firm LLC owner Abe McGull, who represented Felts along with James Hobbs of Kansas City-based Wyrsch, Hobbs & Mirakian PC, at the Dec. 17 sentencing hearing sought to bring attention to alleged crimes by Felts’ co-conspirator in the case, who he identified as Craig Davis. McGull alleged Davis, who he said is scheduled to be sentenced in January in Virginia, was the mastermind of the fraud scheme.

“He got sucked in. His only flaw was he trusted the wrong man,” McGull said of Felts. “We have the mule. We don’t have the kingpin.”

Speaking at the hearing, Felts said he had attempted to collect evidence to expose Davis when he discovered what he called illegal activity.

“I’m not a career criminal. I’m not a mastermind,” Felts said between tears. “I’m not trying to run. I’m not trying to hide. I’ve been scared for three years.”

Assistant U.S. Attorney Casey Clark said at the hearing that Felts took advantage of the COVID-19 pandemic and federal stimulus funds “to line his own pockets.” The federal government has alleged in the case that Felts used the proceeds of fraudulently obtained stimulus funds for personal expenses such as real estate, vehicles and a yacht, rather than their intended purpose of assisting businesses negatively impacted by the pandemic. In his guilty plea last year, Felts agreed not to contest the federal government’s forfeiture of personal property and real estate purchased with the proceeds of the wire fraud conspiracy.

“It’s important for us to all to remember what life was like back then,” Clark said, referencing loans taken out by Felts during key points in the pandemic. “His crimes will not be forgotten by this community.”

Before issuing the sentence, Bough said that while he doesn’t believe Felts is the worst person involved in the case, his lavish lifestyle detailed by the federal government was a point of contention.

“That concerns me,” he said. “At some point, you knew what was going on stunk to high heaven.

“If you lie down with dogs, you wake up with fleas.”

Bough ordered Felts to self-report to prison on Feb. 28. The judge said Felts would have 14 days to file a notice of appeal.

McGull provided a statement to Springfield Business Journal after the sentencing.

“Today’s federal sentence of Michael Felts reflects the court’s consideration of Felts’ acceptance of responsibility and cooperation with other jurisdictions in bringing Craig Davis, owner and manager of Bright Vanguard LLC, to justice,” the statement reads. “According to federal court documents, Davis has pleaded guilty in the Eastern District of Virginia for conspiring and causing more than $60 million of fraudulently induced lending from at least 15 different lenders across 359 separate loans.”

A news release issued by the office of Teresa Moore, U.S. attorney for the Western District of Missouri, did not name Davis in announcing Felts’ sentence. However, the release states Felts conspired with another person, a San Antonio, Texas, resident identified in court documents as “Individual-1.”

The release states that Felts, 49, and the co-conspirator created fake businesses and fake identities to falsely apply for the government funding.

In one example provided by the U.S. attorney’s office, Felts and the co-conspirator submitted fraudulent information for Diagnostic Equipment Inc., though it was not a legitimate business. Felts submitted fraudulent documents during the first and second rounds of PPP loans using the fake business, federal officials say.

In another example, Felts and the co-conspirator misrepresented the number of employees for Taco Habitat in Branson, according to the release. The federal government states that most of the companies in which Felts applied for stimulus funds did not have employees and were not in operation at the time of the applications.

The personal property and real estate that Felts has been ordered to forfeit to the government includes four real estate parcels in Springfield, six vehicles, two Rolex watches, jewelry and several baseball and basketball cards.

Business status
After PPP fraud allegations by the federal government were brought to light in 2022, Felts’ Taco Habitat, Hot Cluckers and Bourbon & Beale restaurants in Springfield closed.

SBJ reached out to White River Brewing Co., a Commercial Street business in which Felts has held an ownership stake. At the 505 W. Commercial St. brewery, a sign on the door states, “We are temporarily closed. Be back soon!” The brewing tanks remain in the building, but the company has not posted on its Facebook or Instagram pages since this summer.

A company spokesperson answered SBJ’s query in a Facebook message.

“To clarify, Michael Felts does not own this business,” the message from the company reads. “Currently, the brewery is temporarily closed, and we plan to make an announcement regarding the reopening date as soon as we have more information. At this time, there are no plans for permanent closure or sale.”

A follow-up question on the current ownership was not returned by press time.

Greene County assessor and recorder filings show the current building owner, White River Brewery LLC, took over ownership of the property in March. The previous owner is listed as WR Brewery Holdings LLC.

White River Brewery LLC was organized in March with the Missouri secretary of state’s office by Jennifer Felts. Missouri Case.net records list an ongoing dissolution of marriage without children case filed in July by Jennifer Felts against Michael Felts.

WR Brewery Holdings LLC was originally organized with the secretary of state’s office by Michael Felts in 2020. The LLC was modified in June to list Jennifer Felts as the registered agent/member of the entity.

Michael Felts, who was one of SBJ’s 12 People You Need to Know interview guests in 2021, started his work in the local restaurant industry in 2014 with the opening of BYOPizza, according to SBJ archives. He opened Hot Cluckers in 2018, and Taco Habitat and Bourbon & Beale in 2020. Felts purchased White River Brewing Co. in 2021, and he also has worked as an independent contractor for song writing and producing.