Indian-Americans charged in $53 million covid relief fund fraud

Texas: Several Indian-origin business owners and employees are among the 14 people charged in a $53 million fraud scheme related to a COVID-19 pandemic relief program in Texas, United States. They are accused of defrauding the Paycheck Protection Program, a financial program introduced during the COVID-19 era, along with numerous financial institutions, resulting in over $53 million in fraudulent loan proceeds.

The case marks the largest investigation conducted by the Pandemic Response Accountability Committee (PRAC) Fraud Task Force thus far, said US Attorney for the Northern District of Texas, Leigha Simonton, in a press release. The arrests took place on Tuesday and Wednesday in Texas, California, and Oklahoma.

Simonton expressed her concerns over defrauding the government, particularly during a pandemic when numerous hard-working entrepreneurs were struggling to maintain payroll and meet their financial obligations. She emphasised that these defendants conspired to syphon tens of millions of dollars from the Paycheck Protection Program, funds that could have helped legitimate businesses survive and retain their employees.

The indictment, consisting of 16 counts, was filed last week and names individuals such as Mihir Patel, the Chief Financial Officer of Sunshine Recycling; Kinjal Patel, the Controller at Sunshine Recycling; Prateek Desai, the owner of West Texas Scrap; Wajahat Khan, the President and owner of Gulf Coast Scrap; Imran Khan, the Operations Director and owner of 4G Metals and West Texas Equipment; Chirag Gandhi, the Controller of NTC Industries and President and owner of 5G Metals and Sunshine Recycling; Bhavesh Patel, the Chief Business Development Officer for Sunshine Recycling and owner of Level Eight; Dharmesh Patel and Mitra Bhattarai, the Co-Presidents and co-owners of Elephant Recycling; and Bhargav Bhatt, an employee of NTC Industries.

Separate indictments were filed against Mrunal Desai, President of Nanosoft Technologies, Chintak Desai, Ambreen Khan, and Usha Chapain.

The accused individuals allegedly submitted at least 29 fraudulent Paycheck Protection Program loan applications, inflating payroll expenses and manipulating bank statements and tax forms to falsely reflect business income. They allegedly routed the loan funds through multiple bank accounts to create a fictitious paper trail of payroll expenses. Two of the defendants reportedly submitted false applications to financial institutions on behalf of their recycling companies, fraudulently obtaining millions of dollars in business loan proceeds.

If convicted, the defendants could face severe penalties, including up to 30 years in federal prison for various charges such as conspiracy to commit bank fraud, bank fraud, aiding and abetting bank fraud, making false statements to the Federal Deposit Insurance Commission (FDIC), wire fraud, and conspiracy to commit money laundering.

The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted on March 29, 2020, to provide financial assistance to individuals and businesses affected by the COVID-19 pandemic. The program offered forgivable loans to small businesses to cover payroll, rent, and other eligible business expenses. It concluded in May 2021 after serving its intended purpose.