On May 19, 2020, a Texas man was charged with allegedly applying for a bank loan seeking over $5 million dollars in forgivable loans through the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announces the Department of Justice.
Samuel Yates, a thirty-two-year-old resident of Maud, Texas, allegedly filed for a multi-million-dollar sum in forgivable PPP loans with two banks, claiming that Yates needed the loans to cover the wages of over 400 of his employees when in reality Yates actually had no employees at all.
According to court documents unsealed on Tuesday May 19th, Yates allegedly made two fraudulent claims to two separate bank lenders seeking loans guaranteed by the SBA as COVID-19 relief through the PPP.
In the application Yates submitted to the first lender, he allegedly sought an amount of $5 million in a PPP loan by fraudulently stating that he employed 400 workers with an average monthly payroll of $2 million. In the second application, he fraudulently stating that he employed 100 workers and received a $500,000 loan.
In all his applications, Yates included a list of his supposed employees that he actually obtained from a random name generator publicly available on the internet.
In addition, Yates also submitted forged and falsified tax records with each application.
“This defendant allegedly sought to steal millions of dollars in loans intended to aid legitimate small businesses grappling with the economic effects of COVID-19,” announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The department and our law enforcement partners will use all the tools at our disposal to investigate and prosecute frauds against the Paycheck Protection Program.”
“Any time the government provides large amounts of money to the public there are people who will try to cheat the system,” stated U.S. Attorney Joseph D. Brown of the Eastern District of Texas. “We encourage lenders to be very careful, and to report suspicious applications. It is a priority of the Department of Justice to deter and prosecute this type of fraud.”
“The Treasury Inspector General for Tax Administration will aggressively pursue those who try to use the Internal Revenue Service to facilitate their schemes to defraud coronavirus relief programs,” stated Special Agent in Charge Dale Forrester of the Treasury Inspector General for Tax Administration’s Cybercrime Investigations Division. “Our successes today would have not been possible without the joint efforts of the Small Business Administration Office of the Inspector General, the Department of Justice and other law enforcement partners.”
“Providing false statements to gain access to SBA’s programs will be aggressively investigated by our office,” announced Special Agent in Charge Donald Abram of SBA OIG’s Central Region. “SBA OIG and its law enforcement partners are poised to root out wrongdoers in the Paycheck Protection Program and maintain its integrity. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
“Today’s arrest should serve as a strong deterrent to anyone considering exploiting the COVID-19 pandemic to enrich themselves through fraud. These individuals have no concern for legitimate businesses whose employees and their families are hurting financially during these unprecedented times,” announced Special Agent in Charge Ryan L. Spradlin of U.S. Immigration and Custom’s Homeland Security Investigations (HSI) Dallas. “HSI stands at the ready to utilize its ample investigative mandate to assist in rooting out such unscrupulous individuals, and hold them accountable for their crimes.”
Enacted on March 29, 2020, the CARES Act is a federal law designed to provide emergency financial aid to Americans suffering the economic hardships caused by the COVID-19 pandemic. One source of that aid was providing up to $349 billion in forgivable loans to small businesses through the PPP that would help with job retention and other expenses. Congress authorized over an additional $300 billion in PPP funding in April 2020.
If you, friends, coworkers, or a family member see any suspicious fraud related to COVID-19 involving
- PPP loans applications,
- Receipt of federal benefits under the CARES Act, or
- Related to receipt of any other benefits under a government benefits program,
Please visit the website of the Department of Justice, federal investigators, or local law enforcement to report the activity and obtain more information. Be safe.