Bowie County man charged with $ 5 million in COVID rescue fraud | USAO-EDTX
TEXARKANA, Texas – A 32-year-old man in Maud, Texas has been accused of allegedly filing bank loan applications by fraudulently seeking more than $ 5 million in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, U.S. District Attorney for the Eastern District of Texas, Stephen J. Cox, announced today.
Samuel Yates was charged with two counts of wire fraud returned by a federal grand jury in Texarkana, Texas on January 14, 2021. Yates is said to have requested millions of dollars in SBA-guaranteed forgivable loans from two different banks by claiming having over 400 employees earn a salary when in fact no employee worked for his alleged company.
According to unsealed court documents today in U.S. District Court in Texarkana, Yates allegedly made two fraudulent claims to two different lenders for SBA-guaranteed loans for COVID-19 relief through the PPP. In the application submitted to the first lender, Yates allegedly requested $ 5 million in PPP loan products by fraudulently claiming to have more than 400 employees with an average monthly payroll of more than $ 2 million. In the second application, Yates claimed to employ over 100 people and was able to secure a loan of over $ 500,000. With each request, Yates submitted a list of suspected employees that he obtained from a publicly available random name generator on the Internet. He also submitted false tax documents with every request.
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 maintenance and certain other expenses, through the PPP. In April 2020, Congress authorized more than $ 300 billion in additional P3 funding.
The PPP allows small businesses and other eligible organizations to receive loans with a two-year term and an interest rate of 1%. The proceeds of the PPP loan are to be used by businesses on salary costs, mortgage interest, rent, and utilities. PPP allows interest and principal to be remitted if companies spend the proceeds of those expenses within eight weeks of receipt and use at least 75% of the remitted amount for payroll.
A federal indictment is just an indictment. An accused is presumed innocent until proven guilty.
This matter was investigated by the Office of the Inspector General of the SBA and the United States Postal Inspection Service. Prosecutor Louis Manzo of the Fraud Section of the Criminal Division and Chief Criminal Officer Frank Coan and Assistant U.S. Attorney Jonathan R. Hornok for the Eastern District of Texas are continuing the case.