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With prison looming, former escort squandered $150K COVID-19 loan on travel, clothes, feds say

Crystal Lundberg has been in hot water with the feds since 2017, when she was first charged along with financial executive Scott Kennedy in a $5.79 million fraud scheme.

Crystal Lundberg is seen in a Facebook photo included in a federal court filing
U.S. District Court records

Before a federal judge sentenced her in December to more than four years in prison, Crystal Lundberg said her federal wire fraud conviction had changed her life for the better — she had become legitimately employed and had “definitely changed mentally, emotionally.”

Still, old habits die hard. And now prosecutors say Lundberg has since squandered thousands from a $150,000 COVID-19 Economic Injury Disaster Loan on travel and legal bills, electronics, clothing and other items, all while putting off her surrender date with the Federal Bureau of Prisons that had originally been set for Jan. 20, 2020.

Meanwhile, a federal agent also pointed in a court filing Monday to Lundberg’s Facebook postings, including one in which she allegedly wrote in October, “I run it up [until] the feds come.”

“Honestly, I cannot wait to get this federal sh - - outta the way so I can go back [to] being F---ING GREAT!” she allegedly wrote in September. “I hate living within limits!!”

A defense attorney for Lundberg did not respond to messages seeking comment. Assistant U.S. Attorney Nicholas Eichenseer wrote in a filing seeking Lundberg’s detention that Lundberg’s counsel had promised to surrender her Monday. The new allegations against Lundberg have so far not led to additional criminal charges against her, court records show.

Federal prison records on Tuesday showed Lundberg in custody at Chicago’s downtown Metropolitan Correctional Center.

Lundberg, 34, has been in hot water with the feds since 2017, when she was first charged along with financial executive Scott Kennedy in a $5.79 million fraud scheme. The two met when Kennedy hired her as an escort. He later gave her access to his company’s credit card, and she helped him rack up exorbitant charges on luxury goods and services.

Kennedy pleaded guilty, testified at Lundberg’s trial about how he had fallen in love with her, and was sentenced in July to more than two years in prison. Prison records show he is already in custody at a low-security facility in Texas.

However, Lundberg was sentenced first, following her conviction at trial. U.S. District Judge Elaine Bucklo handed her a 53-month sentence in December 2019. Since then, Lundberg has repeatedly sought to delay her surrender to the federal prison system. She is now due Dec. 31.

Meanwhile, the feds say Lundberg applied twice this summer for a COVID-19 Economic Injury Disaster Loan for a beauty salon business. Such a loan must be repaid by the borrower, and a felony conviction within the past five years automatically disqualifies an applicant from the program, according to an affidavit from an FBI special agent.

In her first application in June, Lundberg answered “no” to questions asking whether she faced criminal charges or had been convicted of a felony in the last five years. That application was denied because her application did not indicate an economic injury, according to the affidavit.

In her second application in August, she answered “yes” to the questions about her criminal history. When the Small Business Administration followed up to ask her about it, she apparently made reference only to a separate criminal case she faced in state court in Winnebago County, which was ultimately dismissed, and didn’t mention her federal conviction.

“Eating [sic] in abetting a fugitive and obstruction of justice my daughter had her boyfriends friend in my house and I didn’t know about it so when the cops came to my door asked me about it I said no but I allowed them to check my house and they found a boy there so the arrested me but I got the charges dismissed,” Lundberg allegedly wrote.

An SBA loan officer wrote “Offense: Charges dropped,” in Lundberg’s file on Aug. 31, the affidavit said. The next day, the SBA approved her $150,000 loan. Between Sept. 5 and Sept. 30, the feds say there were $75,031 in withdrawals from the account in which the money was deposited.

They also said expenditures from the account that month included $1,446 on SnapTravel, $1,088 at Towne Place Suites and $649 at Home2 Suites. They also said $13,250 went to law firms in Palatine, Rockford and Schaumburg, including to a firm representing Lundberg’s daughter in a battery case in Winnebago County. They also said purchases were made “at or near the Mall of America” after Lundberg asked a judge for permission to take a relative to the Mayo Clinic.