Indian-American engineer pleads guilty to COVID-19 relief fraud charges
What's the story
An Indian-American engineer in the US has pleaded guilty to the charge of seeking more than $10 million in loans under a coronavirus relief program set up to help small businesses, the Department of Justice has said. Shashank Rai, 30, pleaded guilty on Thursday to one count of making false statements to a bank.
Information
Rai was charged with the following violations
He was charged on May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the Small Business Administration (SBA).
His plea
Rai admitted he sought millions of dollars in forgivable loans
As part of his guilty plea, Rai admitted that he sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when no employees worked for his purported business. Rai made two fraudulent claims to two lenders to seek loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program.
Details
Details of the two applications he submitted seeking loans
In the application submitted to the first lender, Rai sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million. In the second application, Rai sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.
Investigation
No records of employee wages having been paid were found
According to court documents, Texas Workforce Commission provided information to investigators that there were no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC. In addition, the Texas Comptroller's Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.
Information
Handwritten notes scribbled with plans to use the money
As per court documents, materials recovered from the trash outside of Rai's residence included handwritten notes that appear to reflect an investment strategy for $3 million, which is the amount of money that Rai allegedly sought from the second lender.
Statement
Will prosecute those who exploit the PPP: Acting Attorney
"The Payroll Protection Programme was designed to help struggling businesses and hard-working Americans, not individuals who concoct imaginary businesses and employees," said Acting US Attorney Nicholas J Ganjei. "We will continue to work diligently with our law enforcement partners to investigate and prosecute those who exploit this critical, taxpayer-funded program," he said.