TEXAS
A Texas man has been charged in federal court with allegedly filing bank loan applications fraudulently seeking more than $5 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, officials stated Tuesday.
Samuel Yates, 32, of Maud, Texas, allegedly sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have over 400 employees earning wages when, in fact, no employees worked for his purported business.
Yates is charged by way of a federal criminal complaint with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.
“Any time the government provides large amounts of money to the public there are people who will try to cheat the system,” said U.S. Attorney Joseph D. Brown of the Eastern District of Texas. “We encourage lenders to be very careful, and to report suspicious applications. It is a priority of the Department of Justice to deter and prosecute this type of fraud.”
“Providing false statements to gain access to SBA’s programs will be aggressively investigated by our office,” said Special Agent in Charge Donald Abram of SBA OIG’s Central Region. “SBA OIG and its law enforcement partners are poised to root out wrongdoers in the Paycheck Protection Program and maintain its integrity. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
Court documents unsealed Tuesday in U.S. District Court in Texarkana, indicate that Yates allegedly made two fraudulent applications to two different lenders for loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program (PPP).
In the application submitted to the first lender, Yates allegedly sought $5 million in PPP loan proceeds by fraudulently claiming to have 400 employees with an average monthly payroll of $2 million. In the second application,
Yates claimed to employ over 100 individuals and was able to obtain a loan over $500,000. With each application, Yates submitted a list of purported employees that he obtained from a publicly available random name generator on the internet.
He also submitted forged tax documents with each application.
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.
One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent.
PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.
The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll.
Yates is presumed innocent unless proven guilty.
DOJ NOTED:
Trial Attorney Louis Manzo of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Frank Coan for the Eastern District of Texas are prosecuting the case.
The Justice Department acknowledges and thanks the SBA Office of Inspector General, and U.S. Postal Inspection Service for their efforts investigating this mater.