Texas engineer fraudulently sought $10 million in loans under CARES Act.
Prosecutors have charged an Indian American engineer in Texas with fraudulently seeking more than $10 million dollars in forgivable loans from two banks under the government’s coronavirus relief program.
Shashank Rai, 30, of Beaumont, Texas, allegedly sought the loans by claiming to have 250 employees earning wages, when, in fact, no employees worked for his purported business.
He allegedly filed bank loan applications guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 29, 2020.
A federal complaint filed in the Eastern District of Texas charges Rai with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.
“As alleged, Rai fraudulently pursued millions of dollars in loans intended for legitimate small businesses suffering the economic hardships of the covid-19 pandemic,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division in a news release.
“The behavior in this case was very brazen,” said US Attorney Joseph D. Brown of the Eastern District of Texas.
According to court documents unsealed Wednesday in US District Court in Beaumont, Rai allegedly made two fraudulent claims to two different lenders for seeking loans guaranteed by the SBA for covid-19 relief through the Paycheck Protection Program (PPP).
In the application submitted to the first lender, Rai allegedly sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million.
In the second application, Rai allegedly sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.
The Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC.
In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.
Materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender.