LOS ANGELES
A former Wells Fargo & Co. banker and his brother have been arrested on an eight-count federal grand jury indictment alleging they schemed to fraudulently obtain more than $2.7 million in taxpayer-funded COVID-19 relief fu
nds and federally guaranteed small business loans, officials stated.
This included submitting applications using the stolen identities of developmentally disabled persons who lived in long-term care facilities, the Justice Department announced Thursday.
Norayr Madadi, 40, of Burbank, and Vazrik Madadi, 44, of Glendale, were arrested Wednesday morning.
Both men are charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, and three counts of money laundering. Norayr Madadi is separately charged with one count of aggravated identity theft and one count of making a false statement to a government agent.
They pleaded not guilty at their arraignment Wednesday in U.S. District Court in Los Angeles. The defendants are presumed innocent unless proven guilty.
A federal magistrate judge ordered Norayr Madadi released on $25,000 bond, ordered Vazrik Madadi released on $50,000 bond, and scheduled a September 2 trial date.
According to the indictment returned on June 17 and unsealed on Wednesday, Norayr Madadi was a banker at Wells Fargo and opened fraudulent accounts in the names of shell companies and individuals, including those using stolen and fictitious identities.
From March 2020 through April 2021, the defendants obtained millions in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL) loans by submitting loan applications with false statements about revenues, operations, and employees.
The defendants used fake and stolen identities to further the fraudulent scheme, including the stolen identities of two victims who are developmentally disabled and live in long-term care facilities.
The Small Business Administration (SBA) and PPP participating lenders disbursed the loans into bank accounts controlled by the defendants, including the Wells Fargo bank accounts opened by Norayr Madadi.
The Madadi brothers allegedly spent the loan proceeds at casinos, paying for luxury cars and jewelry, and cash withdrawals.
Law enforcement believes the losses caused by this scheme are approximately $2.7 million.
If convicted, each defendant would face a statutory maximum sentence of 20 in federal prison for each wire fraud-related count and up to 10 years in federal prison for each money laundering count.
Norayr Madadi would face up to five years in federal prison if convicted of the false statements count and would face a mandatory two-year consecutive prison term if convicted of the aggravated identity theft count.
The FBI is investigating this matter.
Assistant United States Attorney Jason Pang of the General Crimes Section is prosecuting this case, with substantial assistance from Assistant United States Attorney Ryan Waters of the Asset Forfeiture and Recovery Section.