Two Convicted in Federal Program Fraud Scheme Involving Shell Transit Company

A federal jury in Utica, New York, has convicted a New Jersey woman and a Colombian national for orchestrating a multi-million-dollar scheme to defraud federal programs intended to aid elderly, disabled, and homeless individuals, the U.S. Department of Justice announced.

Jael Watts, 45, of Alloway, New Jersey, and Luis Pino-Copete, 42, of Bogota, Colombia, operated a New Jersey-based shell company called Pearl Transit Corporation. Prosecutors stated that between July 2019 and October 2025, the company falsely claimed to employ drivers across the United States to provide transit and outreach services to vulnerable populations.

According to evidence presented at trial, Pearl Transit employed no drivers and provided no transportation services. Instead, the defendants used stolen identities of real people—some of whom were deceased or did not possess driver's licenses—to submit fraudulent claims for reimbursement. The scheme targeted federal pass-through funds administered by the U.S. Department of Transportation (DOT) and the U.S. Department of Housing and Urban Development (HUD), including the Federal Transit Administration's Section 5310 Program, the Community Development Block Grant (CDBG), and the Emergency Solutions Grant (ESG).

In total, the defendants sought more than $13 million in federal funds and successfully obtained over $1.6 million, according to the Department of Justice. The fraudulently obtained payouts included:

• $529,500 in CDBG funds from Gwinnett County, Georgia
• $429,885 in Section 5310 funds from the Los Angeles County Metropolitan Transportation Authority
• $283,000 in ESG funds from Kern County, California
• $379,149 in Section 5310 funds from the City of Raleigh, North Carolina

Prosecutors also presented evidence that the pair fraudulently sought CDBG reimbursements for purported free dental prostheses for homeless individuals. In reality, the defendants manufactured dentures at home using an unsanitary 3-D printer and charged clients fees for mouth scans and fittings.

The investigation originated in late 2024 after the Office of the New York State Comptroller launched an audit into suspicious reimbursement invoices of nearly $750,000 submitted to the New York State DOT. The case was subsequently referred to the DOT Office of Inspector General, HUD Office of Inspector General, and the U.S. Attorney’s Office for the Northern District of New York.

Following the trial, Watts was convicted of five counts of wire fraud, one count of false statements, and one count of aggravated identity theft. Both Watts and Pino-Copete were convicted of wire fraud conspiracy, making false documents, and aggravated identity theft.

Sentencing is scheduled for January 21, 2027, before U.S. District Judge Anthony J. Brindisi. Both defendants face a mandatory minimum of two years and up to 20 years in prison, fines up to $250,000, supervised release, and a restitution order of at least $1.9 million. Pino-Copete, a non-U.S. citizen, also faces potential deportation following the completion of any prison term.

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