A Texas engineer asked for millions of dollars in forgivable loans to pay non-existent employees.
A Texas-based Native American engineer has pleaded guilty to filing fraudulent bank loan applications seeking more than $ 10 million in forgivable loans under anti-covid law.
Shashank Rai, 30, of Beaumont, pleaded guilty Tuesday in the Eastern District of Texas to one count of making false statements to a bank, according to a Justice Department statement.
He was charged on May 13, 2020, with violations of wire fraud, bank fraud, misrepresentation to a financial institution, and misrepresentation to the Small Business Administration (SBA).
As part of his guilty plea, Rai admitted that he applied for millions of dollars in SBA-guaranteed forgivable loans from two different banks claiming to have 250 paid employees when in fact no employee was working. for his alleged business.
Rai made two fraudulent claims to two different lenders for SBA-guaranteed loans for Covid-19 relief through the Paycheck Protection Program (PPP).
In the application submitted to the first lender, Rai requested $ 10 million in PPP loan products by fraudulently claiming to have 250 employees with an average monthly payroll of $ 4 million.
In the second request, Rai requested about $ 3 million in PPP loan products by fraudulently claiming to have 250 employees with an average monthly payroll of around $ 1.2 million.
According to court documents, the Texas Workforce Commission provided investigators with information that no records of employee wages were paid in 2020 by Rai or his alleged company, Rai Family LLC.
Additionally, the Texas Comptroller Office of Public Accounts reported to investigators that Rai Family LLC did not report any income for the fourth quarter of 2019 or the first quarter of 2020.
According to court documents, materials recovered from the garbage outside Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $ 3 million, the amount Rai allegedly requested from the second lender.
The CARES (Coronavirus Aid, Relief, and Economic Security) law promulgated on March 29, 2020 provided for emergency financial assistance, including up to $ 349 billion in forgivable loans to small businesses to maintain employment and certain other expenses, through the PPP.
The PPP allows small businesses and other eligible organizations to receive loans with a two-year term and an interest rate of one percent. The proceeds of the PPP loan are to be used by businesses for salary costs, mortgage interest, rent, and utilities.
The PPP allows for the forgiveness of interest and principal if companies spend the proceeds of these expenses within a specified time frame and use at least a certain percentage of the loan for salary expenses.