KC Reporter

An Independence, Missouri woman has pleaded guilty in federal court to participating in a fraud scheme that targeted the U.S. Small Business Administration and several state governments.

Cathy M. Kelley, 69, admitted to knowingly receiving stolen government funds. According to court documents, Kelley received $59,900 in Economic Injury Disaster Loan proceeds from the U.S. Small Business Administration in September 2020 after another individual submitted a fraudulent application for the funds. Kelley then used the money for personal purchases and made large cash withdrawals.

Kelley also acknowledged that during 2020 and 2021 she knowingly received stolen unemployment benefits from multiple states, including Washington, Massachusetts, Colorado, Florida, Kansas, California, and Nevada. She received these benefits through various financial accounts under her control as well as state-issued debit cards sent to her residence. The plea agreement states that the stolen unemployment benefits included federal funds and that Kelley received at least $250,000 in total stolen funds during this period.

Under federal law, Kelley faces up to 10 years in prison without parole. However, the final sentence will be determined by the court based on advisory guidelines and other statutory factors. Her sentencing hearing is scheduled for January 6, 2026.

Assistant U.S. Attorney Nicholas P. Heberle is prosecuting the case following an investigation by the U.S. Department of Homeland Security Office of Inspector General; U.S. Department of Labor Office of Inspector General; and U.S. Postal Inspection Service.