Another attempted fraud of PPP loan applications alleged; up to $13 million sought

A Texas man has been charged with filing phony applications seeking loans of up to $13 million under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) – at least the second case in which charges have been filed, according to a release from the U.S. Attorney for the Eastern District of Texas.

The office of inspector general for the Federal Deposit Insurance Corp. (FDIC) participated in the investigation, the law enforcement agency said.

According to the U.S. Attorney, Shashank Rai, 30, of Beaumont, Texas, allegedly sought up to $13 million 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.

In a federal criminal complaint, Rai is charged with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.

The U.S. Attorney said that, in court documents unsealed in U.S. District Court in Beaumont, Rai allegedly made two fraudulent claims to two different lenders seeking loans guaranteed by the SBA for COVID-19 relief through the PPP. In the application submitted to the first lender, Rai allegedly sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million. In the second application, Rai allegedly sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.

The documents, the U.S. Attorney said, also showed that 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.

Apparently, some of the information was retrieved from the trash. “According to court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender,” the law enforcement agency said.

Engineer Charged in Texas with COVID-Relief Fraud

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