Chinese National Sentenced To 52 Months For $20 Million Covid-19 Pandemic Loan Fraud Scheme
Muge Ma, a/k/a “Hummer Mars,” Lied that His Phony Companies Had Hundreds of Employees and Paid Millions in Wages to Receive COVID-19 Loan Funds
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MUGE MA, a/k/a “Hummer Mars,” was sentenced to 52 months in prison in connection with a fraudulent scheme to obtain over $20 million in Government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic. In connection with loan applications for relief available from the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) Program, MA falsely represented to the U.S. Small Business Administration (“SBA”) and six financial institutions that his companies, New York International Capital LLC (“NYIC”) and Hurley Human Resources LLC (“Hurley”), had hundreds of employees and paid millions of dollars in wages to those employees, when, in fact, MA appears to have been the only employee of his companies. MA previously pled guilty to bank fraud and aggravated identity theft before U.S. District Judge Richard M. Berman, who imposed today’s sentence. MA was arrested on May 21, 2020 and has been detained since his arrest.
U.S. Attorney Damian Williams said: “Within days of Congress authorizing billions of dollars to help small businesses struggling to make ends meet during the COVID-19 pandemic, Muge Ma saw it as an opportunity to enrich himself by applying for millions of dollars in funds to pay wages to hundreds of employees that never existed. Today’s sentence demonstrates that this Office and our law enforcement partners will work tirelessly to prosecute those who sought to commit pandemic relief fraud.”
According to public filings in Manhattan federal court:
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 hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the SBA’s PPP. Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs. Businesses applying for a PPP loan must provide documentation to confirm that they have previously paid employees the compensation represented in the loan application. The CARES Act also expanded the separate EIDL Program, which provided small businesses with low-interest loans of up to $2 million that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing due to COVID-19.
From at least in or about March 2020 through at least on or about May 15, 2020, MA applied to the SBA and at least six banks for a total of over $20 million in Government-guaranteed loans for his companies NYIC and Hurley (together, the “Ma Companies”) through the SBA’s PPP and EIDL Program. In connection with these loan applications, MA represented, among other things, that he was the sole owner and executive director of the Ma Companies, that the Ma Companies were located on the sixth floor of his luxury condominium building in New York, New York, and that NYIC and Hurley together had hundreds of employees and paid millions of dollars in wages to those employees on a monthly basis. In fact, however, MA appears to have been the only employee of NYIC since at least in or about 2019, and Hurley does not appear to have any employees. In order to support the false representations made by MA in the loan applications about the number of employees at, and the wages paid by, the Ma Companies, MA submitted fraudulent and doctored bank records, tax records, insurance records, payroll records, and/or audited financial statements to six different banks, and also provided links to the Ma Companies’ websites, which describe them as purportedly “global” companies. MA also used the name and identity of another person in connection with the submission of a fraudulent loan application and supporting documentation to at least one financial institution.
Before the discovery of the fraudulent conduct by MA, the SBA approved a $500,000 EIDL Program loan for NYIC and a $150,000 EIDL Program loan for Hurley, and $20,000 in loans advances were provided to MA by the SBA. In addition, a bank approved and disbursed over approximately $800,000 in PPP loan funds for Hurley, which were frozen in connection with this investigation. MA thereafter withdrew his loan applications from the banks and returned the funds.
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Mr. Williams praised the investigative work of the FBI’s Financial Cybercrimes Task Force, SBA-OIG, and IRS-CI. Mr. Williams also thanked the Office of the New York State Comptroller, the New York State Department of Labor, and the New York City Police Department for their assistance with the investigation.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Sagar K. Ravi is in charge of the prosecution.