HOUSTON – Seven individuals across two states have been charged in a Houston federal indictment unsealed Tuesday for their alleged participation in a scheme to improperly obtain approximately $16 million in forgivable Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
This investigation is being conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) in Houston, Texas, with assistance from the Small Business Administration (SBA) – Office of Inspector General (OIG), Central Region; Federal Housing Finance Agency (FHFA) – OIG, Central Region; Federal Deposit Insurance Corporation (FDIC) – OIG; and Treasury Inspector General for Tax Administration (TIGTA).
Amir Aqeel, 52, and Pardeep Basra, 51, both of Houston; Rifat Bajwa, 51, Richmond, Texas; Mayer Misak, 40, Cypress, Texas; Mauricio Navia, 41, Katy, Texas; and Richard Reuth, 57, Spring, Texas, made their initial appearances Nov. 17 in the Southern District of Texas. They are all charged with conspiracy to commit wire fraud and wire fraud. The indictment also charges Aqeel with three counts of money laundering.
Also named in the Houston indictment is Siddiq Azeemuddin, 41, of Naperville, Ill. He also faces charges of conspiracy to commit wire fraud, wire fraud and money laundering. Azeemuddin made his initial appearance Nov. 17 in the Northern District of Illinois.
The indictment alleges that all seven conspired to submit more than 80 fraudulent PPP loan applications by falsifying the number of employees and the average monthly payroll expenses of the applicant businesses. In support of these fraudulent loan applications, they conspired to submit, and did submit, fraudulent bank records and/or fake federal tax forms, according to the charges. Some of the PPP loan applications were allegedly submitted on behalf of companies the defendants controlled.
Other loan applications were submitted on behalf of entities that third parties allegedly owned, according to the indictment. In exchange for these, several of the defendants received large kickbacks, according to the charges.
The indictment further alleges the defendants laundered a portion of the fraudulent proceeds by writing checks from companies that received PPP loans to fake employees. Those that received checks included some of the defendants and their relatives, according to the charges. The fake paychecks were then allegedly cashed at Fascare International Inc. dba Almeda Discount Store – a cash checking company Azeemuddin owned.
The indictment alleges that over 1,100 fake paychecks totaling more than $3 million in fraudulent PPP loan proceeds were cashed at Azeemuddin's business.
Federal agents also executed 45 seizure warrants in conjunction with the case. Some of the items seized included a Porsche and a Lamborghini allegedly purchased with illegally obtained funds.
"These defendants allegedly participated in a scheme to capitalize on the pandemic by filing at least 80 fraudulent PPP applications and enriching themselves by $16 million, spending it on luxury items such as a Porsche and Lamborghini automobiles," said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department's Criminal Division. "The department and our law enforcement partners will continue to aggressively pursue those who would seek to illegally exploit the ongoing national emergency for their own benefit."
"Some fraudsters create the most complicated schemes to steal money from the taxpayer. Just image how productive they could be if they put their creativity and effort into noble and useful work," said U.S. Attorney Ryan K. Patrick. "With the great work of so many partner agencies, we will bring to justice those who steal from the treasury."
"Greed has no place in SBA's programs that are intended to provide assistance to the nation's small businesses struggling with the pandemic challenges," said SAC Sharon Johnson, SBA-OIG, Central Region. "OIG and its law enforcement partners will relentlessly pursue fraudsters and bring them to justice. I want to thank the U.S. Attorney's Office and our law enforcement partners for their dedication and pursuit of justice."
"To support small and community banks, federal home loan banks can accept PPP loans as collateral when making loans to their members," said SAC Catherine Huber, FHFA-OIG, Central Region. "OIG is proud to work with our partners in law enforcement to prevent, detect and deter attempts to perpetrate fraud in the federal home loan bank system and steal the assistance intended for small business owners and employees under this important part of the CARES Act."
"Today's indictment describes significant abuse of public funds meant for struggling American businesses and families," said SAC Laurie L. Younger, FDIC- OIG. "This alleged fraud represents substantial, egregious and coordinated actions that undermine faith in our financial systems and programs enacted by Congress to help our nation recover from economic damage brought on by COVID-19. We thank our law enforcement partners for their cooperation in this investigation."
"The Treasury Inspector General for Tax Administration aggressively pursues those who endeavor to defraud programs afforded to the American people under the CARES Act," said J. Russell George, TIGTA. "We appreciate the efforts of the Department of Justice and our law enforcement partners in this effort."
Assistant U.S. Attorneys Rodolfo Ramirez and Kristine Rollinson are prosecuting the case along with Trial Attorneys Louis Manzo and Della Sentilles of the Criminal Division's Fraud Section.
This is an ongoing investigation. If the public has further information regarding this fraud, please contact ICE HSI at 1-866-DHS-2-ICE.
A federal criminal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The CARES Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is 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, Congress authorized more than $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 1 percent. Businesses must use PPP loan proceeds for 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 a set time period and use at least a certain percentage of the loan towards payroll expenses.
In April, ICE HSI launched Operation Stolen Promise to prevent and investigate illegal criminal activity surrounding the pandemic, strengthen global supply-chain security and protect the American public. Operation Stolen Promise combines ICE's expertise in global trade, financial fraud, international operations and cyber-crime to investigate financial fraud schemes, the importation of prohibited pharmaceuticals and medical supplies, websites defrauding consumers, and any other illicit criminal activities associated with the virus that compromises legitimate trade or financial systems or endangers the public.
One of the main goals of Operation Stolen Promise is to educate the public on the various types of fraudulent activity targeting innocent victims, how to identify this type of crime, and how to report it to authorities. ICE HSI is using its Strategic Targeted Outreach Program (S.T.O.P.) to equip the public with the tools to do just that and to help ICE HSI and its law enforcement partners combat COVID-19 Fraud. The S.T.O.P. COVID-19 FRAUD campaign provides red flag indicators and asks people to report COVID-19 Fraud to COVID19FRAUD@DHS.GOV.