Texas man charged with filing $ 5 million in COVID rescue fraud
TEXARKANA, Texas (KSLA) – A Texas man is accused of filing fraudulent bank loan applications totaling more than $ 5 million in forgivable loans guaranteed by the Small Business Administration (SBA) under Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Samuel Yates, 32, of Maud, Texas, applied for loans from two different banks claiming to have hundreds of employees at his business when he had no employees working for his alleged business.
According to court documents from the US District Court in Texarkana, Yates’ claim to the first lender was for $ 5 million in Paycheck Protection Program (PPP) loan proceeds claiming to have over 400 employees with over 2 million. monthly payroll dollars. In his second application, Yates claimed to have over 100 employees and was able to secure a loan of over $ 500,000.
Yates submitted both claims using forged tax documents and employee lists created using random name generators on the Internet.
“These accusations are expected to have a strong deterrent effect on anyone considering exploiting the COVID-19 pandemic to enrich themselves through fraud. These people don’t care about the legitimate businesses whose employees and their families are suffering financially in these unprecedented times, ”said Special Agent in Charge Ryan L. Spradlin of US Homeland Security (HSI) Immigration Investigations and Customs (HSI) Dallas. “HSI is ready to use its broad investigative mandate to help root out these unscrupulous individuals and hold them accountable for their crimes.”
Yates was indicted in East Texas District Court through a federal indictment for wire fraud violations. Federal indictments are charges, meaning Yates is presumed innocent unless and until proven guilty.
Two others face similar charges in the same US District Court in Texarkana.
Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, face charges for filing hundreds of fraudulent economic disaster loan (EIDL) applications with the SBA under the CARES law.
Pape and Jung reportedly operated a COVID relief fraud program known as My Buddy Loans. The two were able to obtain more than $ 775,000 in fraud proceeds, resulting in a loss of at least $ 1.3 million for the United States.
Pope and Jung face up to 10 years in federal prison and a fine of $ 5,000,000 upon conviction.
“In a time when small businesses – the engines of our economy in East Texas – needed the help the Small Business Administration rushed to provide the most, these people took advantage of the exhausting members of the public. resources available to small businesses and lining their own pockets with fraudulent gain, ”said US Attorney Stephen J. Cox of the Eastern District of Texas. “We encourage members of the public and the banking community to remain vigilant, to watch for fraud as another round of COVID relief begins. It is a priority for the Department of Justice to deter and prosecute this type of fraud.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. A source of relief provided by law has enabled businesses to obtain forgivable loans to retain employees and cover other expenses, such as mortgages, rent, and utilities.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF online complaint form.
Copyright 2021 KSLA. All rights reserved.