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Press Release

Long Island Physician Sentenced to 51 Months in Prison for Covid-19 Loan Fraud

For Immediate Release
U.S. Attorney's Office, Eastern District of New York
Dr. Konstantinos Zarkadas Fraudulently Obtained More than $3 Million in Small Business Loans to Purchase a Yacht and Maintain a Lavish Lifestyle

Earlier today, in federal court in Central Islip, Konstantinos Zarkadas, a Glen Cove-based medical doctor, was sentenced by United States District Judge Gary R. Brown to 51 months’ imprisonment for fraudulently obtaining millions of dollars in COVID-19 emergency relief funds.  The Court also ordered Dr. Zarkadas to pay approximately $3.5 million in restitution.  Dr. Zarkadas pleaded guilty in November 2021 to disaster relief fraud and wire fraud in connection with his receipt of small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP). As part of the plea agreement, Dr. Zarkadas forfeited $200,000 and four luxury wristwatches.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Thomas Fattorusso, Jr., Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the sentence.

“Today’s sentence demonstrates there are consequences for those who treat vital government programs as cash give-a-ways and shamefully seek to profit from an unprecedented public health crisis,” stated United States Attorney Peace.  “This Office will vigorously prosecute and bring to justice medical professionals like the defendant and other fraudsters who are driven by greed to maintain a lavish lifestyle at the expense of small businesses in legitimate need of COVID-19 emergency assistance.”

“It’s a shame to see rampant abuse of programs designed to help ordinary people struggling through the pandemic.  Dr. Zarkadas chose greed over honesty by financing a luxury lifestyle on the backs of America’s taxpayers,” stated IRS-CI Special Agent-in-Charge Fattorusso.  “Thanks to the investigative work of IRS-CI and the FBI, he’ll sail straight to federal prison instead of onboard his $1.7 million yacht that was illegally purchased with CARES Act funds.”

Between March 2020 and July 2020, amid the COVID-19 pandemic, Dr. Zarkadas fraudulently applied for, and received based on the false information that he provided, at least 11 PPP and EIDLP loans totaling approximately $3,700,000, on behalf of corporate entities he controlled.  Dr. Zarkadas laundered the loan proceeds through various bank accounts, ultimately using the funds for extravagant personal purchases and other impermissible purposes.  For example, in July 2020, Dr. Zarkadas used approximately $194,915.42 in PPP funds to finance the down payment on a $1.75 million yacht.  To conceal the fraudulent nature of the purchase, Dr. Zarkadas made the check payable to a family member who was not the ultimate beneficiary of the funds and, in the check’s memo line, falsely indicated the funds were “repayment for payroll.”  Dr. Zarkadas also withdrew tens of thousands of dollars’ worth of loan proceeds in cash and used some of the proceeds to satisfy more than $1 million in judgments against him, to lease luxury automobiles, and to make personal purchases, including several Rolex and Cartier wristwatches which he forfeited as part of his guilty plea in this case.   

Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.   Enacted on March 29, 2020, the CARES Act provided emergency financial assistance in connection with economic effects of the COVID-19 pandemic.  One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities.  The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.

Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters and homeowners in regions affected by declared disasters.  Under the program, EIDLP recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL (EIDL Advance).  The amount of an EIDL Advance was determined based on the number of employees working for the applicant.  The EIDL Advance did not have to be repaid.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Anthony Bagnuola is in charge of the prosecution.

The Defendant:

Age:  48
Glen Cove, New York

E.D.N.Y. Docket No. 21-CR-363 (GRB)


John Marzulli
Danielle Blustein Hass
United States Attorney’s Office
(718) 254-6323

Updated March 18, 2022

Financial Fraud