Former HSI Special Agent Sentenced to More Than Six Years in Prison on Tax, Structuring, and Concealment Charges
CHICAGO – The owner and operator of several information technology companies in the Chicago area has been charged with filing a bank loan application that fraudulently sought more than $400,000 in a forgivable Paycheck Protection Program loan guaranteed by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act.
Rahul Shah, 51, of Evanston, was charged in a criminal complaint filed in the Northern District of Illinois with bank fraud and making false statements to a financial institution. An initial appearance in U.S. District Court in Chicago has not yet been scheduled.
The complaint was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; Inspector General J. Russell George of the Treasury Department Inspector General for Tax Administration (TIGTA); Inspector General Hannibal “Mike” Ware of the Small Business Administration Office of Inspector General (SBA-OIG), and Special Agent-in-Charge Emmerson Buie, Jr., of the FBI’s Chicago Field Office. The government is represented by Assistant U.S. Attorney Tyler C. Murray of the Northern District of Illinois, and Deputy Chief Brian R. Young of the Criminal Division’s Fraud Section.
“The Paycheck Protection Program was designed as a lifeline for small businesses struggling to survive the COVID-19 pandemic,” said U.S. Attorney Lausch. “My office is working closely with our law enforcement partners to hold accountable anyone who seeks to commit fraud in connection with this important program.”
The CARES Act was enacted on March 29, 2020, to provide emergency financial assistance to the millions of Americans 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 one percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within 24 weeks of receipt and use at least 60% of the forgiven amount for payroll.
According to the complaint, Shah caused to be submitted to a federally insured bank an application for a $441,138 loan guaranteed by the SBA which significantly overstated the payroll expenses of a company that he controlled. In support of the loan application, Shah allegedly caused to be submitted to the lender several false and fraudulent IRS documents, including IRS Forms 1099-MISC representing that the company made payments to several individuals who later confirmed to federal investigators that they had not received such payments.
In addition, Shah allegedly signed and caused to be submitted to the lender what purported to be IRS Forms 941 representing his company’s quarterly payroll expenses for 2019. A comparison between the documents submitted to the lender and the company’s IRS filings revealed that Shah’s company reported significantly lower payroll expenses to the IRS, the complaint states.
A complaint is merely an accusation. The defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law. The bank fraud and false statement charges are each punishable by up to 30 years in federal prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
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 Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.