LOS ANGELES
Officials announced Tuesday that a Westside man had been arrested on a federal grand jury indictment alleging he fraudulently obtained nearly $3.2 million in COVID-19 loans for his businesses that were shell companies.
Mark Farag Shehata, 70, a.k.a. “Samy Farag,” “Mark Farag,” and “Mark Fshehata,” of Marina del Rey, was arrested Monday morning by federal agents.
Shehata pleaded not guilty to seven counts of wire fraud. A July 24 trial date was scheduled, and a $500,000 bond was set in this case.
According to a federal grand jury indictment returned on June 8 and unsealed Monday, Shehata organized and registered four limited liability companies that purportedly operated in Marina del Rey: Shirmak Group LLC; Cynergy Group Internatioal (sic) LLC; Global Network Investments LLC; and Alpha and Omega Group LLC.
From May 2020 to May 2021, Shehata allegedly submitted at least seven false and fraudulent loan applications under the Paycheck Protection Program (PPP), a financial aid plan Congress enacted to support businesses harmed by the COVID-19 pandemic’s economic impact.
Recipients used the PPP loans to pay only certain authorized business expenses, such as payroll, mortgage interest, lease, and utilities.
The indictment alleges that Shehata’s four businesses were nothing more than shell companies.
None of the PPP loan proceeds Shehata allegedly fraudulently obtained was used to make payments to employees for payroll or any business expenses.
In furtherance of the scheme, Shehata submitted to the Small Business Administration and several lenders false applications requesting $5.4 million in PPP loans, fraudulently obtaining approximately $3,154,265 in PPP proceeds, the indictment alleges.
Shehata would face a statutory maximum sentence of 20 years in federal prison for each count if convicted. Shehata is presumed innocent unless proven guilty.
The U.S. Department of Justice Office of Inspector General investigated this matter.
Assistant U.S. Attorney Valerie L. Makarewicz of the Major Frauds Section is prosecuting this case.
Anyone with general information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.