Federal Jury Finds Three Defendants Guilty in $300 Million Nationwide Telemarketing Fraud Scheme Targeting the Elderly
MINNEAPOLIS – A Maple Grove man has been sentenced to 60 months in prison followed by two years of supervised release for fraudulently applying for $9,619,046.46 from the U.S. Small Business Administration’s Paycheck Protection Program, out of which he fraudulently obtained and misappropriated more than $1.7 million. Acting U.S. Attorney Charles J. Kovats made the announcement after Senior U.S. District Judge David S. Doty sentenced the defendant.
According to court documents, Aditya Raj Sharma, 47, was the founder, CEO, and president of Crosscode Inc., a cloud-based software development company originally headquartered in Maple Grove, Minnesota. In November 2019, Sharma was removed as an officer and terminated from the company by Crosscode’s board of directors. Between May 2020 and July 2020, Sharma created three separate technology companies, Kloudgaze Inc., Neoforma LLC, and Mokume LLC.
From April 2020 through August 2020, Sharma applied for 16 loans from ten different lenders for a total of $9,619,046.46 through the U.S. Small Business Administration’s Paycheck Protection Program (“PPP”) by submitting false and fraudulent applications under the names of his various technology companies. As part of his fraud scheme, Sharma submitted fabricated supporting records, made false statements about the number of employees he had and the amount of payroll expenses he incurred, and made false statements about the relevant corporate entities and intended use of the loan proceeds. Sharma also applied for one of his fraudulent loans in the name of his wife without her knowledge or approval.
In addition, on April 26, 2020, Sharma submitted an application in the name of “Crosscode dba Kloudgaze” seeking a $562,500 PPP loan. On the application Sharma falsely stated that “Crosscode dba Kloudgaze” was in operation on February 15, 2020, even though Sharma did not create Kloudgaze until May 2020. In addition, Sharma falsely stated that he was the 100% owner and CEO of Crosscode, that Crosscode did business under the name of Kloudgaze, and that “Crosscode dba Kloudgaze” had approximately 29 employees on its payroll even though records from the State of Minnesota show Sharma paid no wages to a single Kloudgaze employee. In support of the application, Sharma included fraudulent supporting documentation, including fabricated bank account statements.
As a result of Sharma’s fraud scheme, lenders approved three of his PPP applications and deposited $1,773,600 in PPP funds into bank accounts controlled by Sharma. Rather than using the funds for permissible business expenses, Sharma used the money to pay off unrelated legal debts, fund new business ventures, transfer approximately $14,000 to a financial account in India, and pay for home improvements, including landscaping and the installation of a $64,300 backyard pool at his residence.
On July 8, 2021, Sharma pleaded guilty to one count of wire fraud.
During the investigation, law enforcement seized approximately $674,980.76 in fraudulent proceeds held in multiple bank accounts controlled by Sharma. The seized funds will be forfeited to the United States and Sharma has been ordered to pay $1,773,600 in restitution.
This case was the result of an investigation conducted by the FBI.
Assistant U.S. Attorneys Matthew S. Ebert, Jordan L. Sing, Quinn Hochhalter, and Craig R. Baune prosecuted the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.