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Image for representation purposes only (Reuters)
Shashank Rai, 30, allegedly sought millions of dollars in forgivable loans guaranteed by the Coronavirus Aid, Relief and Economic Security Act (CARES) in the United States.
- PTI
- Last update: May 14, 2020, 11:48 a.m. IST
An Indian-born engineer in the United States has been accused of fraudulently seeking more than $ 10 million in loans under a coronavirus relief program established to help small businesses.
Shashank Rai, 30, allegedly sought millions of dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief and Economic Security Act of two different banks by claiming they have 250 employees who earn wages when, in fact, no employee worked for their alleged business.
Rai, who lives in Texas, is charged with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.
“As alleged, Rai fraudulently sought millions of dollars in loans for legitimate small businesses suffering from the economic difficulties of the COVID-19 pandemic,” said Deputy Attorney General Brian Benczkowski of the Justice Department’s Criminal Division.
US Attorney Joseph Brown of the Eastern District of Texas described Rai’s behavior as “very cheeky,” and those who submit these loan applications or other aid must understand that there are people who verify the representations made, and those representations are made. they make under oath. and subject to penalties of perjury.
“Federal agencies are on the lookout for fraud, and people who lie and try to trick the system will be caught and prosecuted,” he said.
Inspector General Jay Lerner of the Office of Inspector General of the Federal Deposit Insurance Corporation (FDIC OIG) said the charges hold Rai responsible for his actions to “defraud money from a federal program aimed at helping those in need during a pandemic crisis. ”
“When an individual cheats the Paycheck Protection Program with money, it deprives hard-working, deserving Americans of small businesses,” said Lerner.
According to court documents released Wednesday in the US District Court. USA In Beaumont, Rai allegedly made two fraudulent claims to two different lenders to apply for SBA-guaranteed loans for COVID-19 relief through the Check Protection Program (PPP).
In the application submitted to the first lender, Rai allegedly sought $ 10 million in PPP loans by fraudulently claiming that he had 250 employees with an average monthly payroll of $ 4 million.
In the second request, he allegedly sought approximately $ 3 million in PPP loan funds by fraudulently claiming that he had 250 employees with an average monthly payroll of approximately $ 1.2 million.
According to court documents, the Texas Workforce Commission provided information to investigators that Rai or his alleged business, Rai Family LLC, had no records of employee wages paid in 2020.
Additionally, the Texas Comptroller’s Office of Public Accounts informed investigators that Rai Family LLC did not report earnings for the fourth quarter of 2019 or the first quarter of 2020.
Materials recovered from the trash outside Rai’s residence included handwritten notes that appear to reflect a $ 3 million investment strategy, which is the amount of money he allegedly sought from the second lender.
The CARES Act is a federal law enacted in March of this year and is designed to provide emergency financial assistance to the millions of Americans suffering from the economic effects of 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 more than $ 300 billion in additional PPP funds.
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