Texas Man Pleads Guilty to $24 Million COVID-Relief Fraud Scheme
A Texas man pleaded guilty today to orchestrating a fraudulent scheme to obtain approximately $24.8 million in forgivable Paycheck Protection Program (PPP) loans and laundering the proceeds.
According to court documents, Dinesh Sah, 55, of Coppell, admitted that he submitted 15 fraudulent applications, filed under the names of various purported businesses that he owned or controlled, to eight different lenders seeking approximately $24.8 million in PPP loans. Sah claimed that these businesses had numerous employees and hundreds of thousands of dollars in payroll expenses when, in fact, no business had employees or paid wages consistent with the amounts claimed in the PPP applications. Sah further admitted that he submitted fraudulent documentation in support of his applications, including fabricated federal tax filings and bank statements for the purported businesses, and falsely listed other persons as the authorized representatives of certain of these businesses without the authority to use their identifying information on the applications.
“As the nation was crippled by a global pandemic, Sah fraudulently obtained over $17 million in PPP funds intended to help legitimate small businesses and spent that money on luxury cars and multiple homes,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “As our nation continues to fight this unprecedented virus, the Department of Justice and its law enforcement partners remain committed to aggressively pursuing individuals who exploit COVID-relief programs and to ensuring that these ill-gotten gains are returned.”
“The Paycheck Protection Program was designed to aid struggling business owners, not to line the pockets of crafty profiteers,” said Acting U.S. Attorney Prerak Shah of the Northern District of Texas. “Even as fellow businesspeople tried desperately to procure the funds they needed to keep their business afloat, Sah dipped into federal coffers to fund his lavish lifestyle. The Justice Department is committed to protecting the PPP from fraud and deceit.”
“We will continue to vigorously investigate cases involving attempts to defraud the Paycheck Protection Program and other crimes against the financial institutions the FDIC insures and regulates,” said Special Agent in Charge Anand M. Ramlall of the Federal Deposit Insurance Corporation – Office of Inspector General (FDIC-OIG). “Sah’s egregious fraud committed to fund his luxurious lifestyle is unacceptable under any circumstances, but especially so when done against a program designed to help Americans recover from the ongoing pandemic. We appreciate the cooperation and coordination of our law-enforcement partners on these types of investigations.”
Sah admitted that, based on his false statements and fabricated documents, he received over $17 million in PPP loan funds and diverted the proceeds for his personal benefit, using them to purchase multiple homes in Texas, pay off the mortgages on other homes in California, and buy a fleet of luxury cars, including a Bentley convertible, Corvette Stingray, and Porsche Macan. Sah also sent millions of dollars in PPP proceeds in international money transfers. As part of his guilty plea, Sah agreed to forfeit, among other property, eight homes, numerous luxury vehicles, and more than $7.2 million in fraudulent proceeds that the government has seized to date.
Sah pleaded guilty to one count of wire fraud and one count of money laundering in the Northern District of Texas. He will be sentenced at a later date and faces a maximum penalty of 30 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The Dallas Field Offices of the FDIC-OIG, IRS-Criminal Investigation, and U.S. Treasury Inspector General for Tax Administration are investigating the case.
Assistant Deputy Chief Anna G. Kaminska of the Criminal Division’s Fraud Section and Section Chief Katherine Miller of the U.S. Attorney’s Office for the Northern District of Texas are prosecuting the case. Assistant U.S. Attorneys Erica Hilliard and Dimitri Rocha are handling the asset-forfeiture component of the case.
The Coronavirus Aid, Relief, and Economic Security (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 over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.
The Fraud Section leads the Department of Justice’s prosecution of fraud schemes that exploit the CARES Act. In the months since the CARES Act was passed, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real-estate properties and luxury items purchased with such proceeds. More information can be found at: https://www.justice.gov/criminal-fraud/cares-act-fraud.
Anyone with general information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.