While millions of Americans are unemployed, also have food and housing insecurities, Paycheck Protection Program (PPP) fraud exploded across the country this summer because there were virtually no checks and balances, allowing criminals to file fraudulent loans.
It comes hardly any surprise that the latest PPP fraud scheme involves seven individuals across two states who were charged in a Houston federal indictment unsealed Tuesday for their involvement in a scheme to obtained upwards of $16 million in PPP loans, according to ABC13 Houston.
The federal indictment, unsealed Tuesday, accused the group of using PPP loans to buy luxury goods and exotic cars such as Porsches and Lamborghinis.
"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," Acting Assistant Attorney General Brian Rabbitt said in a press release. "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."
The indictment named seven defendants who appeared in front of U.S. Magistrate Judge Andrew M. Edison on Tuesday.
"Amir Aqeel, 52, and Pardeep Basra, 51, both of Houston, Texas; Rifat Bajwa, 51, of Richmond, Texas; Mayer Misak, 40, of Cypress, Texas; Mauricio Navia, 41, of Katy, Texas; and Richard Reuth, 57, of Spring, Texas."
Prosecutors said the defendants had submitted fraudulent PPP loan applications by inflating the number of employees and average monthly payroll expenses. To do this, they also submit fraudulent bank records and federal tax forms. PPP loan applications were also submitted on behalf of companies the defendants controlled. Other loan applications were submitted via third party entities.
"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."
In total, the defendants wrote more than 1,100 fake paychecks, collecting around $3 million in PPP loans that were deposited at Azeemuddin's business.
"Today's indictment describes significant abuse of public funds meant for struggling American businesses and families," said Special Agent in Charge Laurie L. Younger of the Federal Deposit Insurance Corporation OIG.
The problem with the PPP program is that with little checks and balances, it fueled an unprecedented explosion of fraud.
We noted in July that a Flordia man used PPP loans to purchase a 2020 Lamborghini Huracan.
A California man fraudulently obtained $860,000 in PPP loans and fled the country.
Another man used PPP loans to buy Bitcoin.
Even JPMorgan employees were accused of pocketing U.S. coronavirus relief funds.
All of this happened despite the DOJ warning about early signs of PPP fraud in April, around the time the program began to disperse the loans.