Shashank Rai, 30, pleaded guilty on Thursday to one count of making false statements to a bank.
He was charged on May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the Small Business Administration (SBA).
As part of his guilty plea, Rai admitted that he sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business.
Rai made two fraudulent claims to two different lenders to seek loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program (PPP).
In the application submitted to the first lender, Rai sought USD 10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of USD 4 million.
In the second application, Rai sought approximately USD 3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately USD1.2 million.
According to court documents, the Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC.
In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.
As per court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the USD3 million, which is the amount of money that Rai allegedly sought from the second lender.
“The Payroll Protection Programme was designed to help struggling businesses and hard working Americans, not individuals who concoct imaginary businesses and employees,” said Acting US Attorney Nicholas J Ganjei.
“We will continue to work diligently with our law enforcement partners to investigate and prosecute those who exploit this critical, taxpayer-funded programme,” he said. LKJ AMS