President Donald Trump speaks during a signing ceremony for Bill HR 748, the CARES Act in the Oval Office of the White House March 27, 2020 in Washington, DC.
Erin Schaff | Swimming pool | Getty Images
WASHINGTON – A Texas man has been charged with fraud for allegedly asking for more than $ 5 million in forgivable loans guaranteed by the Small Business Administration under the CARES Act, claiming to have a business with more than 400 employees.
Samuel Yates, 32, from Maud, Texas, allegedly made two fraudulent requests to two different lenders for Covid-19 emergency relief loans through the Paycheck Protection Program (PPP), the Ministry of Justice announced on Tuesday.
In the application submitted to the first lender, Yates allegedly solicited $ 5 million in PPP loans by fraudulently claiming to have 400 employees. In the second application, Yates claimed to employ over 100 people and was successful in obtaining a loan of $ 500,000. He also allegedly presented false tax documents.
Yates used a random name generator on the Internet to compile a list of alleged employees, according to unsealed court documents Tuesday in U.S. District Court in Texarkana, Texas.
“This defendant has allegedly sought to steal millions of dollars in loans intended to help legitimate small businesses struggling with the economic effects of COVID-19,” said Deputy Attorney General Brian Benczkowski of the Criminal Division of the Department of Justice. “The department and our law enforcement partners will use every tool at our disposal to investigate and prosecute fraud against the Paycheck Protection Program.”
Yates was indicted on Tuesday in the Eastern District of Texas through a federal criminal complaint for wire fraud violations, bank fraud, misrepresentation to a financial institution, and misrepresentation to the SBA. A federal criminal complaint is only a charge and an accused is presumed innocent unless and until proven guilty.
The CARES law, enacted on March 29, provides emergency financial assistance to the country’s smallest businesses amid the economic fallout caused by the unprecedented coronavirus pandemic. The first-come, first-served paycheck protection program has authorized up to $ 349 billion in forgivable loans to small businesses for job maintenance, wage costs, rent and utilities.
In less than a month, the rescue loan program hit his $ 349 billion limit and was out of money. On April 21, Congress authorized $ 310 billion in additional P3 funding.
“Whenever the government provides large sums of money to the public, there are people who try to cheat the system,” said US Attorney Joseph Brown for the Eastern District of Texas. “We encourage lenders to be very careful and to report suspicious claims.”
Earlier this month, two New England men were the first to be accused of fraudulently asking for help a federal program to ease the financial burden of the coronavirus pandemic. The men are said to have requested more than $ 500,000 in aid from the new CARES Act wage protection program.
Last week, Texas engineer accused of allegedly filing bank loan applications fraudulently seeking over $ 10 million in SBA-guaranteed relief loans. The person claimed to have a business and a payroll of 250 employees.