Native American engineer in Texas charged with COVID rescue fraud
An engineer has been indicted in the Eastern District of Texas for allegedly filing bank loan applications while fraudulently seeking more than $ 10 million in forgivable loans guaranteed by the Small Business Administration (SBA) under the Act. aid, relief and economic security from the coronavirus (CARES). .
Shashank Rai, 30, of Beaumont, Texas, allegedly requested millions of dollars in SBA-guaranteed forgivable loans from two different banks claiming to have 250 paid employees when in fact no employee worked for his alleged company , according to the Department of Justice.
Rai is charged in a federal criminal complaint with wire fraud violations, bank fraud, misrepresentation to a financial institution, and misrepresentation to the SBA.
“As alleged, Rai fraudulently sought millions of dollars in loans intended for legitimate small businesses suffering from the economic hardships of the COVID-19 pandemic,” said Deputy Attorney General Brian A. Benczkowski of the Criminal Division of the Ministry of Justice. “The ministry and our law enforcement partners will remain vigilant in our efforts to protect critical CARES law relief programs from fraud and abuse.”
“The behavior in this case was very brazen,” said US Attorney Joseph D. Brown of the Eastern District of Texas. “Those who submit these requests for loans or other assistance should understand that there are people who verify the statements made, and those statements are made under oath and subject to the penalties of perjury. Federal agencies are monitoring fraud, and people who lie and try to cheat the system will be arrested and prosecuted. “
“To support small banks and community banks, federal mortgage banks can accept Paycheck Protection Program (P3) loans as collateral when making loans to their members,” said Richard Parker, Acting Deputy Inspector General for Investigations of the Federal Housing Finance Agency, Office of the Inspector General. “The Office of the Inspector General is proud to work with our law enforcement partners to prevent, detect and deter attempted fraud in the federal home loan system and to steal assistance intended for homeowners and employees. small businesses under this important part of the CARES Act.
“Today’s charges hold the accused accountable for his actions to defraud money from a federal program to help those in need during a pandemic crisis,” Inspector General Jay N said. Lerner of the Office of the Inspector General of the Federal Deposit Insurance Corporation (FDIC OIG). “When an individual cheats the paycheck protection program with money, it robs hard-working Americans and deserving small businesses. The FDIC OIG is committed to working with our law enforcement partners to investigate financial crimes to preserve the integrity of the country’s banking sector.
According to unsealed court documents Wednesday in Beaumont U.S. District Court, Rai allegedly made two fraudulent claims with two different lenders to apply for SBA-guaranteed loans for COVID-19 relief through the PPP.
In the application submitted to the first lender, Rai allegedly 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 allegedly requested around $ 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 Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $ 349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized more than $ 300 billion in additional P3 funding.
The PPP allows small businesses and other eligible organizations to receive loans with a two-year term and an interest rate of 1%. The proceeds of the PPP loan are to be used by businesses on salary costs, mortgage interest, rent, and utilities. PPP allows interest and principal to be remitted if companies spend the proceeds of those expenses within eight weeks of receipt and use at least 75% of the remitted amount for payroll.
A federal criminal complaint is only an accusation. An accused is presumed innocent until proven guilty.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Disaster Fraud Enforcement Center hotline at 866-720- 5721 or via the NCDF web complaint form at: https: //www.justice. gov / disaster-fraud / ncdf-disaster-complaint-form.