WASHINGTON — A Texas man has been charged with fraud for allegedly seeking more than $5 million in forgivable loans backed by the Small Business Administration under the CARES Act, by claiming to have a business with more than 400 employees.
Samuel Yates, 32, of Maud, Texas, allegedly made two fraudulent applications to two different lenders for emergency Covid-19 relief loans through the Paycheck Protection Program (PPP), the Department of Justice announced Tuesday.
In the application submitted to the first lender, Yates allegedly sought $5 million in PPP loans by fraudulently claiming to have 400 employees. In the second application, Yates claimed to employ over 100 individuals and was successful in obtaining a $500,000 loan. He also allegedly submitted forged tax documents.
Yates used a random name generator on the internet to come up with a list of purported employees, according to court documents unsealed Tuesday in the U.S. District Court in Texarkana, Texas.
"This defendant allegedly sought to steal millions of dollars in loans intended to aid legitimate small businesses grappling with the economic effects of COVID-19," said Assistant Attorney General Brian Benczkowski of the Justice Department's Criminal Division. "The department and our law enforcement partners will use all the tools at our disposal to investigate and prosecute frauds against the Paycheck Protection Program."
Yates was charged Tuesday in the Eastern District of Texas 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. A federal criminal complaint is merely an accusation and a defendant is presumed innocent unless and until proven guilty.
The CARES Act, enacted on March 29, provides emergency financial assistance to the nation's smallest businesses amid the economic fallout caused by the unprecedented coronavirus pandemic. The first-come, first-serve Paycheck Protection Program authorized up to $349 billion in forgivable loans to small businesses for job retention, payroll costs, rent and utilities.
In less than a month, the rescue loan program hit its $349 billion limit and was out of money. On April 21, Congress authorized $310 billion in additional PPP funding.
"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 Brown of the Eastern District of Texas. "We encourage lenders to be very careful, and to report suspicious applications."
Earlier this month, two New England men were the first people to be charged with fraudulently applying for aid from a federal program to ease the financial burden from the coronavirus pandemic. The men allegedly applied more than $500,000 in assistance from the new CARES Act Payroll Protection Program.
Last week, an engineer in Texas was charged with allegedly filing bank loan applications fraudulently seeking more than $10 million dollars in relief loans guaranteed by the SBA. The person claimed to have a business and a payroll of 250 employees.
