Indian-origin business owners arrested in $53 Million COVID-19 relief fraud scheme in Texas
A group of around 14 individuals, including several Indian-origin business owners and employees, have been charged in a massive fraud scheme involving a COVID-19 pandemic relief program in the state of Texas, United States.
The case, considered the largest investigated by the Pandemic Response Accountability Committee (PRAC) Fraud Task Force thus far, has led to the arrest of the defendants across Texas, California, and Oklahoma.
The accused are alleged to have defrauded the Paycheck Protection Program (PPP), a financial program introduced during the COVID-19 pandemic, as well as various financial institutions, out of over $53 million in loan proceeds.
US Attorney for the Northern District of Texas, Leigha Simonton, emphasized the seriousness of the charges, stating, “Defrauding the government is an affront to American taxpayers. Defrauding the government during a pandemic – at a time when millions of hardworking entrepreneurs struggled to make payroll and rent – is pouring salt in a wound.”
“These defendants allegedly conspired to steal tens of million dollars from the Paycheck Protection Program—funds which could have helped legitimate businesses pay their bills and keep their employees afloat.”
The 14 individuals face a 16-count indictment, with charges including conspiracy to commit bank fraud, bank fraud, wire fraud, making false statements, and conspiracy to commit money laundering.
The accused allegedly submitted fraudulent PPP loan applications, inflating payroll expenses by manipulating bank statements and tax forms.
They also created a false paper trail of payroll expenses by routing the loan funds through multiple bank accounts.
Among those charged are Mihir Patel, the Chief Financial Officer of Sunshine Recycling, as well as owners and employees of various businesses including Mammoth Group, R.A. Industries, L.K. Industries, West Texas Scrap, Gulf Coast Scrap, 4G Metals, West Texas Equipment, NTC Industries, Sunshine Recycling, Level Eight, Elephant Recycling, Nanosoft Technologies, and others.
The PPP, established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, aimed to provide financial assistance to individuals and businesses impacted by the pandemic. It offered forgivable loans to small businesses to cover payroll and certain business expenses. The program concluded in May 2021.
If convicted, the defendants could face severe penalties, including up to 30 years in federal prison for each count of conspiracy to commit bank fraud, bank fraud and aiding and abetting, bank fraud, and making false statements to the Federal Deposit Insurance Commission (FDIC). Plus, they could face up to 20 years for wire fraud and 10 years for conspiracy to commit money laundering.