Five Texas men have pleaded guilty in a scheme to fraudulently obtain and launder millions of dollars in forgivable Paycheck Protection Program (PPP) loans.
PPP Loans
PPP loans were designed to help small businesses keep their workers on payroll during the Covid-19 pandemic. While loans were obtained from various lenders, they were guaranteed through the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. PPP loans help fund payroll costs, including benefits, and used to pay for, among other things, mortgage interest, rent, utilities, and worker protection costs related to Covid-19. And, quite favorably, borrowers who met certain criteria were eligible for loan forgiveness.
Initially, Congress authorized up to $349 billion in forgivable loans as part of the program. Congress subsequently authorized over $300 billion in additional PPP funding.
As with the ERC program, the lure of free money has proved irresistible to many—including those who have intentionally taken advantage of the programs when they were not eligible.
Conspiracy
According to court documents, Muhammad Anis, Nishant Patel, Harjeet Singh, Arham Uddin, and Ammas Uddin, engaged in a conspiracy to defraud the SBA and SBA-approved PPP lenders by submitting false and fraudulent PPP loan applications. Anis obtained a false and fraudulent PPP loan of approximately $483,333; Patel obtained a false and fraudulent PPP loan of roughly $474,993; Singh obtained two false and fraudulent PPP loans totaling around $937,379; Arham Uddin obtained a false and fraudulent PPP loan worth approximately $491,664; and Ammas Uddin obtained a false and fraudulent PPP loan of nearly $498,415.
The defendants also assisted in laundering the fraudulently obtained PPP loan funds by supplying co-conspirators with blank, endorsed checks made payable to people posing as employees to make the loans potentially forgivable at a later date. However, those people were not employees. These fake paychecks were then cashed at check-cashing stores that other conspiracy members controlled.
Guilty Pleas
Anis, Patel, Singh, Arham Uddin, and Ammas Uddin each pleaded guilty to one count of conspiracy to commit wire fraud.
Sentencing is scheduled for Jan. 4, 2024. Each of the five face a total maximum penalty of five years in prison.
Others Involved
Earlier this year, Abdul Fatani was convicted for his role in the same.
According to court documents and evidence presented at trial, Fatani conspired with others to submit fraudulent PPP loan applications by falsifying the number of employees and the average monthly payroll expenses of the applicant businesses. The co-conspirators sought over $35 million through more than 80 fraudulent PPP loans. Fatani distributed over $500,000 in fraudulent loan proceeds to his co-conspirators and himself using bogus payroll checks and laundered a portion of the proceeds by transferring the funds from one of his bank accounts to another bank account he controlled.
Fatani was convicted of one count of conspiracy to commit wire fraud, one count of wire fraud, and one count of money laundering.
Fatani was originally scheduled to be sentenced on May 8, but court documents (which are sealed) suggest that hasn’t happened yet. He faces a maximum penalty of 20 years in prison for conspiracy and wire fraud and ten years in prison for money laundering.
An additional fifteen other individuals have pleaded guilty to their involvement in the loan fraud scheme.
Fraud Cases
Since the introduction of the CARES Act, the Fraud Section has prosecuted over 200 defendants in more than 130 criminal cases and has seized over $78 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.
Report Fraud
The government encourages anyone with information about allegations of attempted Covid-19 fraud to report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or by using the NCDF Web Complaint Form.