In November, seven individuals in two states were charged by the Department of Justice for their alleged involvement in a scheme to obtain $16 million in Paycheck Protection Program (PPP) loans backed by the Small Business Administration (SBA) under the CARES Act.
Amir Aqeel, 52, and Pardeep Basra, 51, both of Houston, Texas; Rifat Bajwa, 51, of Richmond, Texas; Mayer Misak, 40, of Cypress, Texas; Mauricio Navia, 41, of Katy, Texas; and Richard Reuth, 57, of Spring, Texas, made their initial federal court appearances before Judge Andrew Edison on November 17, 2020.
Alleged Fraudsters Charged With Conspiracy, Wire Fraud, Money Laundering
All of the accused have been charged in federal court with wire fraud and conspiracy to commit wire fraud. Also, the indictment charged Aqeel with money laundering.
Another man named in the federal indictment is Siddiq Azeemuddin, 41, from Naperville, Illinois. He has been charged with wire fraud, money laundering, and conspiracy to commit wire fraud. Azzemuddin also made his initial appearance in federal court on November 17 before Judge Heather McShain.
The Accused Illegally Submitted More Than 80 PPP Applications
Acting Assistant Attorney General Brian Rabbitt stated that each defendant allegedly was involved in a scheme to capitalize on the COVID-19 crisis by filing more than 80 phony PPP applications worth at least $16 million. They spent the money on super expensive luxury items, including a Lamborghini and Porsche.
Rabbit noted that the Justice Department and federal law enforcement would continue to pursue criminals who want to exploit the national crisis for their financial benefit.
SEE ALSO: PPP Fraud Charges
US Attorney Ryan Patrick from the Southern District of Texas added that many criminals are creating complex schemes to steal taxpayer money. If they put their creativity into something useful, they could be productive members of society. With many partner agencies’ work, the Justice Department will continue to prosecute people who attempt to steal from the US Treasury.
The Accused Falsified Number of Employees And Payroll Expenses
The federal indictment states that all of the accused submitted 80 fake PPP loan applications by making up the number of employees they had and their average monthly payroll expenses. To support these phony loan applications, they submitted false bank records and false federal tax returns. Some of the PPP applications were submitted by companies the accused controlled.
According to federal charging documents, other PPP loan applications were turned in by entities that third parties control. In exchange, several defendants received kickbacks.
The federal indictment also states that the defendants engaged in money laundering by writing checks from firms that received the loans to phony employees. Those who received the checks included the defendants and some of their relatives. The phony paychecks were cashed at a check-cashing firm that Azeemuddin owned.
The federal indictment states that at least 1,100 phony paychecks totaling at least $3 million PPP loan proceeds were cashed at the business.
Federal agents also executed 50 federal seizure warrants during the case. Some of the items seized by the government included a Lamborghini and Porsche. One of the defendants also bought a $1 million 6,000 square-foot home in TX with the illegal money.
These men are hardly the first to use taxpayer money to buy luxury items. A Florida man earlier in 2020 was arrested after prosecutors said he received $4 million in phony PPP loans and used some of the cash to buy a Lamborghini.
Rules for CARES Act Requires Businesses to Use Funds for Business Costs
The CARES Act was intended to provide emergency financial relief to millions of business owners and employees suffering from devastating economic effects from the pandemic. The CARES Act authorized $349 billion in loans to small businesses to continue to pay employees who had been idled and other business-related expenses. Congress authorized $300 billion more in funding in April 2020. It is unknown if more funds will be allowed when the new Congress convenes in January 2021.
Businesses are required to use PPP loans for payroll, utilities, interest on mortgages, and rent. PPP lets the interest and principal be forgiven if the company spends the money in a certain period, and if a certain percentage of the loan is used for payroll.
In April, the federal government started Operation Stolen Promise to stop and prevent illegal criminal activity surrounding the COVID-19 pandemic. One of the biggest goals of Operation Stolen Promise is to educate consumers about the many types of fraudulent activity that targets innocent taxpayers.
Americans are being encouraged to identify these crimes and report them to the federal government. Anyone who suspects a business or individual engaging in PPP fraud should report it to COVID19FRAUD.DHS.gov.
- Seven Charged in Connection With COVID Relief Fraud Scheme. Accessed at https://www.justice.gov/opa/pr/seven-charged-connection-covid-relief-fraud-scheme-involving-more-80-fraudulent-loan
- Seven Charged in Scheme To Defraud Government of $16 Million. Accessed at https://www.ice.gov/news/releases/7-charged-connection-scheme-defraud-16-million-covid-19-relief-loans#wcm-survey-target-id]