Recently, charges were filed against 14 individuals implicated in a massive $53 million PPP fraud scheme.
Federal prosecutors in Texas continue their pursuit of business owners involved in fraud investigations related to the Payroll Protection Program (PPP)
This fraud investigation adds to the mounting number of investigations targeting those who exploited the federal government’s pandemic relief program. The Paycheck Protection Program, part of the $2 trillion Coronavirus Aid, Relief, and Economic Security Act, was initiated in March 2020 to provide emergency loans amounting to $800 billion.
Juan Gonzalez, the U.S. attorney for the Southern District of Florida, acknowledged that the Trump administration foresaw instances of fraud when designing the intentionally simple application process. Despite the inherent risks, the government prioritized speedy distribution of funds to those truly in need. This streamlined process inadvertently encouraged unscrupulous business owners to apply for loans, with some recipients misusing the funds for personal gains such as luxury cars and extravagant properties instead of retaining employees.
A fraud investigations case from 2021 involved Dinesh Sah, a 55-year-old individual from Coppell, who was sentenced to 11 years in prison after fraudulently obtaining a $24.8 million PPP loan, receiving over $17 million. Sah applied using 15 businesses, several of which lacked employees and were registered after the CARES Act had been enacted. The ill-gotten funds were utilized to purchase multiple properties in Texas and pay off mortgages for homes in California. Sah also indulged in luxury vehicles, including a Bentley convertible, a Corvette Stingray, and a Porsche Macan. As part of his sentence, he was required to pay nearly $17.3 million in restitution, forfeit eight homes, six cars, and over $9 million.
Another fraud investigations case involved Dallas televangelist Marcus Lamb, who acquired a “multimillion-dollar” private jet merely two weeks after receiving a federal PPP loan. Following suspicions surrounding the timing of the jet’s purchase, Daystar Television Network was compelled to return its $3.9 million PPP loan.
These fraud investigations highlight the abuse of funds intended for struggling businesses during the pandemic
Among the recent fraud investigations, a defendant charged was Austin St. John, also known as Jason Lawrence Geiger, who portrayed the Red Power Ranger in the popular 1990s TV series Mighty Morphin Power Rangers. St. John was involved in a fraud scheme that secured a $3.5 million PPP loan. He transferred the money to his personal account and spent it on personal items. These fraud investigations cases are part of the broader trend of fraudulent activities surrounding the PPP, with the Small Business Administration (SBA) estimating that potentially fraudulent loans amounted to over $200 billion, approximately 17% of the total $1.2 trillion disbursed under the program.
The SBA’s Office of the Inspector General has made significant efforts to combat this fraud, seizing or retrieving around $30 billion of the fraudulent loans. The fraud investigations have led to 1,011 indictments, 803 arrests, and 529 convictions. Texas alone has seen over two dozen cases filed. The Inspector General’s report confirms that there are still tens of thousands of fraud investigations leads to pursue, and thousands of investigations are expected to continue for years to come, in an effort to address fraud, waste, and abuse of taxpayer resources.