Charges Levied Against 14 in $53 Million Fraud Tied to Covid Relief
Fourteen people have been charged for allegedly bilking the Paycheck Protection Program (PPP) and numerous financial institutions out of more than $53 million.
The case is the largest investigation to date by the Pandemic Response Accountability Committee (PRAC) Fraud Task Force, which is charged with investigating fraud tied to the more than $5 trillion that was issued via PPP and other Covid-19 emergency relief programs.
The defendants were arrested in late June in Texas, California, and Oklahoma.
“Defrauding the government is an affront to American taxpayers. Defrauding the government during a pandemic – at a time when millions of hardworking entrepreneurs struggled to make payroll and rent – is pouring salt in a wound,” said U.S. Attorney Leigha Simonton of the Northern District of Texas.
According to the indictments, several of the defendants operated a group of recycling companies in the Dallas-area and submitted at least 29 PPP loan applications that fraudulently inflated payroll expenses by doctoring bank statements and Internal Revenue Service (IRS) forms to falsely reflect income.
The defendants— which include the CFO, controller, and corporate officers of the recycling companies— allegedly routed the PPP funds through a series of bank accounts to create a false paper trail of payroll expenses.
At least two of the defendants allegedly submitted false applications to financial institutions to obtain millions of dollars in business loan proceeds.
And one defendant allegedly lied to the Federal Deposit Insurance Corporation (FDIC) about knowing the other defendants.
“The PRAC’s data scientists and investigators use sophisticated data analytics to comb through millions of pandemic relief applications to identify potential fraud. Thanks to the coordinated efforts of the PRAC Fraud Task Force, our law enforcement partners, and the U.S. Attorney’s Office, we can leverage these analytic tools to help recover stolen pandemic relief funds,” said Michael Horowitz, Chair of the Pandemic Response Accountability Committee (PRAC).
Special agents from the Dallas field offices of the Federal Bureau of Investigation (FBI) and the FDIC Office of Inspector General (OIG), assisted the PRAC Fraud Task Force in the investigation.
If convicted, the defendants face up to 30 years in prison for each count of conspiracy to commit bank fraud, aiding and abetting bank fraud, and making a false statement to the FDIC.