Karen Gaston, a 45-year-old resident of East Granby, was sentenced to three years of probation for defrauding federal COVID-19 relief programs out of more than $1.1 million. U.S. District Judge Sarah F. Russell in New Haven also ordered Gaston to serve four weekends in jail, 10 months of home detention, and complete 500 hours of community service.
The charges stem from fraudulent applications Gaston submitted in 2020 for the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL), both established under the CARES Act to support small businesses during the pandemic. The PPP was designed to help businesses retain employees and cover certain expenses, while EIDLs provided working capital for eligible businesses.
According to court documents and statements made in court, Gaston controlled several entities: LNK, Elegant Clinical, Ruby Red LLC, and Diamond Shine LLC. While LNK and Diamond Shine LLC were operational but shared resources and employees, Ruby Red LLC had only one client with Gaston as its sole employee, and Elegant Clinical was no longer active. Beginning around April 2020, she submitted loan applications that misrepresented the status of these companies’ operations and employees. She also filed applications at different financial institutions to conceal her actions.
Prosecutors said her applications included false claims about business activity levels, inflated employee numbers and wages paid, fraudulent tax documents, and misrepresented ownership by listing a family member as a part owner on one application. At least one application was filed after Gaston’s arrest on unrelated state Medicaid fraud charges.
Gaston ultimately received $1,163,910 through these programs but used the funds for personal expenses such as cars, travel, luxury goods including expensive jewelry—specifically a ring purchased from Harry Winston for $39,521.63—and paying off her home mortgage instead of covering payroll or operating costs.
Judge Russell ordered full restitution from Gaston and required forfeiture of the Harry Winston ring purchased with illicit funds.
Gaston pleaded guilty on June 12, 2025 to wire fraud and making illegal monetary transactions.
The Internal Revenue Service’s Criminal Investigation Division led the investigation. Assistant U.S. Attorney Michael S. McGarry prosecuted the case.
Individuals who have information about potential COVID-19 related fraud are encouraged to report it via the Department of Justice’s National Center for Disaster Fraud Hotline or online complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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